Discuss about the Analyzing the Impact of Consumer Trust and Data Privacy on the Performance of E-Commerce Businesses in Australia.
There are several factors that tend to make a significant impact on the consumers’ trust towards the businesses. Thus on the basis of the above aspects, the research title has been designed as follows:
Analyzing the Impact of Consumer Trust and Data Privacy on the performance of E-Commerce Businesses in Australia
With rapid advancements and innovations in technology like internet, the contemporary business environment has undergone significant changes. Internet has led to the development of a global marketplace with huge business opportunities. In this context, Doig, (2016) advocated that internet has not only proved to be beneficial for the businesses, rather internet has also enabled consumers with more power to control several aspects of their lives that include knowledge, time, decision, communications, satisfaction and their expenditure. However, in the present era of internet and e-commerce, trust and privacy has emerged as an important aspect. It has been opined by Tsai et al., (2011) that one of the most important reason that consumers at present refrain themselves often from making their purchases from internet vendors is the lack of trust and concern about their data privacy. So, it can be said that there exist a need for promoting trust and confidence among the consumers to encourage them to make their purchases online. The consumers prefer their personal information and identity to be confidential because of the fear of getting exposed to online fraud. Moreover, the potential risk in context to e-commerce is high because of the lack of physical interaction, anonymity and distance. Trust has been advocated by Li et al., (2011) as an important tool for a successful transaction in both the online and offline environment and a single incident of breach of data privacy on the part of the internet vendors can affect the level of trust of the consumers towards the vendor and can have a significant negative impact on their business.
Thus, drawing inferences from the above aspects and the challenges that internet vendors face in enhancing the level of trust on the part of the consumers, the researcher in the present study would emphasize on analyzing the impact of consumer trust and data privacy on the performance of e-commerce businesses in Australia.
While comparing the traditional business environment with the online business environment, it is observed that that physical cues like the appearance of the store and direct contact of the consumers with the sales person in case of traditional shopping environment is absent in the online shopping environment (Youn, 2009). However, with rapid globalization and advancements in technology, more and more business organizations are swinging towards internet to interact directly with the customers and provide them better services. So, this result in getting more customers conducted in a network generating huge volume of customer data. These data prove to be useful from the business organizations for extracting useful knowledge about the customers and predicting the buying behavior of the consumers. These data are used not only to serve the above mentioned purpose of analyzing the consumer purchase behavior; rather they are also sold to third parties (Lee et al., 2011). So, this raises the concern of data privacy and misuse of the customers’ private data and personal information. Online vendors are also involved in creating consumers’ profiles of their online activities like the websites that are most frequently visited by the customers, their browsing habits to efficiently leverage their past behavior for predicting and influencing their future behavior. This type of personalization tends to depend on two factors as has been proposed by Taylor et al., (2009). The factors include the ability of the marketer to acquire and process the information of the consumers and the willingness on the part of the consumers to share their information and make use of the personalization services. Thus, it can be said that the personalization and privacy can be in conflict that can be referred to as personalization-privacy paradox. So, it has been proposed by Urban et al., (2009) that the above aspect leads to major challenge for the e-commerce businesses since breach of data privacy and misuse of the personal information and details of the consumers can lead to adverse impact on the business and also on their performance.
Detail Statement of the Problem
So, it becomes important to analyze the factors that can lead to enhanced relationship of trust between the consumers and e-commerce businesses. Thus, the researcher in the present study would aim at analyzing the factors that can enhance the trust of the consumers towards online vendors and how concerns related to data privacy can affect the performance of the e-commerce businesses in Australia.
The researcher would aim at gaining an enhanced understanding of the consumers’ trust in e-commerce businesses in Australia together and analyzing the impact of consumers’ concerns towards data privacy on the performance of e-commerce businesses in Australia. Thus, the research study would strive to achieve the following objectives:
- To identify the factors that helps in establishing consumers’ trust in e-commerce businesses in Australia.
- To investigate the factors that influences the willingness of the consumers to share their personal information online.
- To analyze the impact of data privacy concerns of customers on the performance of e-commerce businesses in Australia.
- What are the factors that help in establishing consumers’ trust in e-commerce businesses in Australia?
- What are the factors that influence the willingness of the consumers to share their personal information online?
- What is the impact of data privacy concerns of customers on the performance of e-commerce businesses in Australia?
Why is the chosen project important both theoretically and practically?
According to the study conducted by Kim et al., (2009), it is observed that the increasing use of internet has facilitated the business organizations with more ways of collecting the customers’ data and the potential customers. The concern in collecting consumers’ data is the fact that most of the consumers’ data are collected without the consumer even realizing the fact by making use of the unobtrusive data collection methods. According to Wu et al., (2012), an individual when visits the website of a company unwittingly provides the company with information like his or her IP address, the page that has referred the individual to website of the company and the page individual is viewing. On the other hand the company websites also make of cookies and other tracking devices to collect more relevant customers’ data. These practices in the contemporary business environment have gained popularity since it proves to be beneficial in enhancing the marketing efforts of the business. The customers’ data are used by the marketers to facilitate the customers with a more personalized browsing experience (Belanger & Crossler, 2011). However, with increase in such activities, the concern is about the privacy issues and what customers are giving up for reaping the benefits of personalization. So, it becomes important for the online vendors to understand the fact that issues of data privacy can affect their business performance.
In Addition to the above theoretical aspects, the researcher has also observed the survey conducted by the Centre for Internet Safety at the University of Canberra in partnership with eBay.com.au to analyze the attitude of the eBay users towards the privacy and how it influences and affects their online actions (Canberra, 2012). The survey has revealed the fact that privacy is an important determinant for the consumers to perform online activities especially in context to their decision of buying and selling goods and services online. The survey also led to the findings that the consumers are concerned most about the privacy of their financial data and identity theft. According to the survey, 85% of the Australians are of the opinion that data breach notification should be made mandatory for the businesses (Canberra, 2012). Moreover, across the globe, it has been observed that there were 2.6 million data records those have been stolen or lost or exposed i.e. there have been a surge of 88% in 2018 in comparison to 2017 (Cso, 2018). So, these aspects clearly evidence the emerging issue of data privacy for the consumers making their transactions online. So, on the basis of the above aspects, it can be said that it important to conduct study on the emerging issue to bring the facts into the notice of individual consumers and companies so that necessary steps can be taken. Moreover, the study would also be beneficial in making the online vendors aware of the factors that influence consumers’ trust and how the data privacy concerns and issues related to consumer personal identity theft can affect their business performance.
Research Aim and Objectives
The potential outcome of the research would lead to the fact that consumers’ trust plays a major role in encouraging the consumers to get involved in buying and selling products from the particular online vendors. On the other hand, it is expected that the study would lead to the findings that the concerns on the part of the customers regarding data privacy and personal identity theft can have a negative impact on the performance of the business.
According to the study conducted Cases et al., (2010), developing the trust that leads to enhanced level of satisfaction on the part of the customers is an important and complex task. Palvia, (2009) in his study has identified six elements those when combined can lead to the development of a trust pyramid. The trust pyramid can be illustrated with the help of the following figure:
From the above figure, it is observed that the core elements that are important for the business organizations to maintain their position in the market and secure their position include the merchant legitimacy, the technology and the robust order fulfilment. These elements form the base of the pyramid. Above the base elements, there also exist some subtle elements that can be referred to as trust builders that can be used by the businesses for differentiating itself from the competitors (Palvia, 2009). These elements include the customers’ control, the tone, and consumer collaboration. Thus, the six elements collectively develop the confidence and the comfort that are needed for enhancing the satisfaction on the part of the customers and enhancing the base of loyal customers.
On the basis of the above figure, it is important for the business organizations to adopt the most reliable security measures on their website and it should be efficiently communicated to the consumers in a language they understand. Moreover, it has been proposed by Kshetri, (2014) that for online vendors, brand name plays an important role in enhancing the trust of the consumers. This is because, brand name assist the consumers in making their choice when they possess little information about the functionality and quality of the products. So, it can be said that familiar names coupled with reputable performance records proves to be beneficial in enhancing the consumers’ trust.
In context to trust development, Limbu et al., (2011) has opined that consumers prefer placing orders and receiving the products without much hassle. Thus, if the costs are not clearly defined and right information is not made available, it can have negative impact on the consumers’ preference towards the brand. In addition to the above factors, it has been advocated by Gerlach et al., (2015) that developing consumers’ trust is something more than the technical features of a website. Consumers prefer to be assured of the fact that their personal information and data and their personal identity is handled with much sensitivity. So, is these privacy concerns are breached, the consumers do not prefer making purchases from the brand that has negative impact on the performance of the business. So, it is important that the businesses should post an easy to read privacy statement on their website to inform the consumers about the ways in which their personal information are collected and handled.
Mothersbaugh et al., (2012) argued that when consumers are aware of the fact that they have a control on how business organizations can access their personal data and information, it helps in building a sense of trust on the part of the consumers towards the brand. So, in this context, the businesses can smartly seek permission from the customers to collect their personal information and data to ensure and make the customers feel that they have full control on their buying process as well on how their information and data is being collected. This leads to a positive influence on the perception of the consumers towards the brand. This motivates them to prefer making their purchases from that particular vendor which ultimately enhances the performance of the business.
Collaboration has also been emphasized on by Leon et al., (2013) as an important element in nurturing the trust among the consumers towards the brand. So, if consumers are allowed to collect advice and suggestions from the former customers both in terms of the product quality and in terms of their privacy concerns, it plays an important role in developing a sense of trust among the consumers towards the brand. Thus, with enhanced trust consumers prefer making their purchases from a particular brand and thus it enhances the performance of the business.
Thus, from the above discussions, it can be inferred that the six elements that include the state of the art security, merchant legitimacy, fulfilment, tone, customer control and consumer collaboration leads to the development of a deep and trusting relationship between the brand and the customers. The consumers and the brand can also follow a step by step process for exchanging value which would ultimately lead to enhanced trust. So, every time a consumer willingly shares some of their personal information with the brand, the brand should reward the efforts of the consumers with richer experiences and some personalized services. So, this mutually beneficial relationship can lead to enhanced trust and enhanced trust can lead to enhanced performance of the business through repeat purchases and word of mouth marketing.
Thus, the conceptual framework on the basis of the above aspects can be developed as follows:
State of the art security
Enhanced level of trust of consumers towards the brand,
More repeat purchases and word of mouth marketing
Enhanced business performance Merchant legitimacy
The researcher would collect secondary data from various sources that would include the articles, books and internet. The researcher would also search literature on the basis of the research title and ensure that the articles and journals selected for collecting secondary data are peer reviewed articles and journals and have been published in English Language and have been published between the years 2009 to 2017. The researcher would also collect secondary data from reliable websites and also from the research papers available in the library and from the lectures and notes and study materials provided by the mentors (Hair and Money, 2011). The search for available literature would be conducted through Google Scholar and Google search engine by making an effective use of the key words like consumer trust, e-commerce, internet, transparency, data security, data privacy, theft of personal identity, personalization, brand reputations, business performance, customer satisfaction and customer loyalty.
Justification and Potential Output of the Research project
The researcher in order to satisfy the demands of the study would collect primary data by conducting a questionnaire survey (Bernard, 2011). The purpose of the questionnaire survey would be to collect information in context to the consumers’ perception towards the importance of the different trust factors and how they would behave or conduct their online activities if they realize that their personal data and identity is at stake or is misused. The questions in the questionnaire would be developed on the basis of the factors identified in the literature review (Morgan, 2007). The questionnaire survey would be targeted towards the group of individuals who are 18 years and above and would include both men and women. The questionnaire survey would continue until the researcher would have collected 80 properly filled in questionnaires. The collected response of the customers would be statically analyzed by making an effective use of the SPSS software. The data would be presented through charts, tables and graphs.
The sample selection for the questionnaire survey would be done through probabilistic sampling technique to ensure that the respondents are offered equal opportunity to participate in the survey (Lodico and Spaulding, 2010). The number of respondents that would be targeted by the researcher would include 80 respondents.
Chapter 1: Introduction
The introduction chapter would provide the background of the study, the research rationale, the problem statement, the research aim and objectives and the research questions.
Chapter 2: Literature Review
The chapter would provide some theoretical aspects in context internet and e-commerce together with consumers’ trust in e-commerce and the factors that affect the consumers’ trust. It would also include the arguments of the early researchers and scholars about the relationship between the data privacy concerns and business performance and would provide a conceptual framework.
Chapter 3: Research Methodology
The research methodology would present the empirical methods that would contribute towards conducting the study successfully. It would also provide the research strategy, research approach, research design, data collection methods, data analysis methods, sampling size and sampling technique, research ethics and research limitation with a proper gantt chart to highlight the activities with adequate time frame.
Chapter 4: Data Analysis, Findings and Discussion
The present chapter would include the analysis of the responses collected from the survey. The chapter would present the results of the questionnaire and then it would end with the discussions of the results.
Chapter 5: Conclusion and Recommendations
The final chapter would summarize the study and emphasize on analyzing the successful achievement of the research objectives on the basis of the alignment between the researcher’s theoretical knowledge gained form literature review and from the practical observations collected from questionnaire survey. The chapter would end with recommendations and future scope of the research.
The study would demand wide range of resources that would include the financial resources, the physical resources in the form of pencil, pen, paper, smartphone, printer, internet services and computer and scanner. The study would also involve travelling expenses. Thus, the expense breakdown can be presented as follows:
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