Determinants of Millennials' behavior in online shopping – Implications on consumers’ satisfaction and e-business development

Highlights

• Data of sample of 813 millennial consumers has been analysed by using SEM and the analysis of the variance (ANOVA) test.

• Perceived risks and barriers have the strongest impact on Millennials' behaviour in online shopping.

• High internet penetration and tech savviness enables Millennials to recognize the key benefits of online shopping.

• Male consumers spend more money on it compared to women because of differences in type of products they purchase.

• Millennials prefer doing the online shopping using more famous websites.

Abstract

This paper identifies the attitudes and key determinants of Millennials’ online shopping behavior in Montenegro. An empirical survey was conducted in Montenegro on the sample of 813 millennial consumers by using Structural Equation Modeling and the analysis of the variance (ANOVA) test. The results revealed that Millennials are satisfied with previous experience in online shopping. They perceive it beneficial compared to purchase in traditional shops, but also perceive it as very risky, which is why they buy online mostly inexpensive products. The results also suggested that behavior of millennial consumers in the online purchase significantly depends on their demographic characteristics. While the frequency of online shopping is the same for both genders, male consumers spend more money on it compared to women. Also, men to a greater extent prefer doing the online shopping using more famous websites, than women do. The amount spent in online shopping does not depend on age of consumers, but younger Millennials do this type of purchase more often compared to older Millennials. Based on the results, this paper provides implications for managers important for building the trust of consumers and increase of online sales.

Introduction

In recent years the online shopping has gained high growth rates, characterized by strong consumers' demand and the increasing type of available goods [1]. It is estimated that in 2019 online purchase made about 14.1% percent of total retail sales, with tendency to grow [2]. Still, the reached volume of online sales already indicates several important barriers to its future development. Most of the online purchases are related to very narrow range of products, such as clothes, music, or electronic gadgets [2]. Viewed by countries, the reached volume of online sales significantly differs, regardless of the number of Internet users [3]. Additionally, most of the online purchases are made by Millennials, as the first age group that has full-grown up with Internet based technologies, while other consumers prefer shopping in a traditional way [4,5]. In the literature there are some differences regarding term of Millennials’ birth. While some authors define them as people born between 1982 and 1996 [6,7], the others adopt wider approach, defining as Millennials people born between 1980 and 2000 [8,9].

The e-business adoption caused changes in the way that consumers go through decision-making process. It enabled consumers to easily compare products, compare prices, gain information, share buying experience with others and to do the purchase within only few minutes [10]; y Monsuwé et al., 2014, [11]. Still, despite the benefits it offers, online shopping is often related to the risk of poor product quality, delivery delays and personal information security issues [12,13]. Hence, it becomes noticeable that the regular patterns and characteristics of consumers’ purchasing behavior cannot be applied to the process of online purchase [14,15]. E-business adoption is also recognized as a way of strengthening competitiveness of companies and reducing operating costs, through transformation of its processes [[16], [17], [18], [19], [20]]. Hence, it leads to the better efficiency, sales growth, enchanced communication with consumers and easier penetration on new markets [[19], [20], [21], [22]]. However, managers need to understand the main motives and barrier that consumers face in online shopping, in order to implement suitable marketing strategy and foster e-commerce sales growth. Hence, further research on this topic is of great importance, especially for countries that do not have a good previous knowledge base regarding domestic consumers' behavior in online shopping, such as Montenegro, a country in which this study was conducted.

Despite the high rates of Internet penetration in Montenegro, it is evident that domestic consumers prefer traditional forms of purchase, as 69% of them have never done online shopping [23]. An important obstacle to understanding this phenomenon is that there are no official data available regarding the number of Montenegro companies that sell their products online. The research regarding electronic commerce and overall e-business development is not conducted on the state level. Additionally, even though domestic companies could benefit from implementing a certain form of online-based business strategy, there are no available data regarding Montenegrin consumers' perception related to the online purchase, which is a necessary information base for developing an effective strategy of online sales. However, fostering the implementation of e-commerce and transition to e-business could have significant benefits for domestic companies. These are mostly small companies that are faced with strong foreign competition [24]. Thus, e-business implementation would enable them to reduce costs, gain and strengthen consumers' loyalty and use all the benefits of online marketing strategy in the same way their foreign competitors do. All mentioned above served as one of the key motives for conducting this study.

The previous research in the field pointed out the key presumptions, motives and barriers of online shopping [14,[25], [26], [27], [28], [29]], but often obtained the opposite results. While some authors confirmed that demographic characteristics of Millennials affect their behavior in online shopping [26,[30], [31], [32]], the others found that the influence of demographic characteristics is not statistically significant [27,33]. Therefore, the need to further examine the role of consumers' demographic determinants at a local market level is evident. Additionally, although some of the most important motives and limitations of online shopping have been identified [14,29,[34], [35], [36], [37]], the previous research failed to measure their relative impact on consumers' purchasing behavior. Similarly, earlier research in the field highlighted the positive role of peer influence, the possibility of making social and interpersonal communication vie e-commerce site, and free shipping on trust and satisfaction of consumers [[36], [37], [38]], but failed to analyze the level of satisfaction of consumers from countries (such as Montenegro) were e-commerce is underdeveloped and consumers lack mentioned benefits. Besides that, the different volume of online sales observed by countries that several Internet users cannot explain indicates that in-depth research is needed to identify the relative strength of identified motives and barriers that determine online buyers' behaviour at the local market level. Finally, most of the previous research on the given issue view focused on the behaviour of consumers in online shopping, viewed from marketing perspective [14,26,29,30,34], or were focused on the analysis of infrastructural prerequisites needed for integration of e-commerce transactions within business processes and overall e-business development [[39], [40], [41]]. Unlike them, this study provides a multi contextual framework that analyses the interconnection between Millennials'pererception of e-commerce and their behavior in online shopping as potential opportunities, challenges, and barriers to further e-business development through analysis of the main determinants of Millennials' behavior in online shopping and their attitudes towards e-commerce. The paper offers insight into possibilities and key guidelines for future e-business development based on the specific context with a developing e-commerce market.

According to the authors’ knowledge, there are no previous scientific research in Montenegro that examined the impact of online sales growth on e-business development.

Considering the given research gap, as well as the benefits of e-business development, the goal of this paper is to recognize the attitudes and main determinants of Millennials' online shopping behavior in Montenegro. Additionally, it aims to measure the relative impact of factors that affect it in order to better understand main purchasing motives and barriers they face in that process. Finally, the paper investigates the existence of behavioral differences amongst the Millennials in the online purchasing process are caused by their demographic characteristics (such as gender, age and income), which are reflected in differences regarding the frequency of online shopping, the amount of money spent on it, the type of products being purchased and websites used for making the online purchase. The obtained results will enable better understanding of Millennials online shopping behavior, as a prerequisite for further e-business development. Hence, it would create a basis for implementation of e-business strategy that will be in line with Millennials’ expectations in the purchasing decision-making process and foster online sales. Better understanding of behavior of Millennials, as the buyers that are familiar with the specificities of Internet based technologies, would contribute to the knowledge about main obstacles that prevent other consumers from engagement in this kind of purchasing process and about the ways in which those obstacles can be removed, or at least diminished.

The paper is structured in five sections. The introduction, defines the context and the importance of the research. A summary of previous research, the existing literature gap and hypotheses of the research are given in the second section. The third section describes the sampling procedure of the study and the methodology applied. The fourth section presents the results of the research and discussion on the obtained results. The fifth section presents main conclusions and implications of the research. Also, it includes limitations of the study and recommendations for future research.