JENNIE LYN T.
CABANERO
REFERENCE
Sharma, S., Sitlani, M.
(2015). Perceived Risk and
Online shopping -A Factor
Analysis Approach. Pacific
Business Review
International, Vol. 7, Issue 9
Perceived
Shopping
TOPIC TEXT(DIRECT QOUTES/REPHRASED)
Online shopping is a new channel to purchase
products or services on Internet. This novelty to
consumers might result in some problems.
Perceived risk is the uncertainty that consumers
face when they cannot foresee the consequences
of their purchase decisions *(Schiffman et al.,
2007). Perceived risk has been taken as
important factor influencing online buying. The
term perceived risk means the individual's
subjective belief about potentially negative
consequences from his/her decision. In other
words, perceived is used as opposed to
objective outcome distributions of an alternative
or a product class with that a consumer is
associated. (pp.22)
A more positive online shopping experience led
to consumers' less perceived purchasing risk
level in Internet and a higher perceived risk led to
Risk
less future purchasing intention from Internet
(Samadi and Najadi, 2009). (pp.22)
It reflects customer's subjective belief about the
probability of a negative outcome from any
purchase decisions in terms of functional risk,
physical risk, financial risk, social risk,
psychological risk or time risk (Suresh and
Shashikala, 2011). (pp.22)
According to Lee and colleagues (2001), two
main categories of perceived risk emerge in the
process of online shopping. The first is the
perceived risk associated with product/service
and includes functional loss, financial loss, time
loss, opportunity loss, and product risk. The
second is the perceived risk associated with
context of online transactions, and includes risk
of privacy, security, and nonrepudiation. (pp. 22)
Online Privacy and security risk was also discussed by
previous researchers in the context of online
shopping. It was found that an anxiety regarding
security of personal information had a negative
influence on online shopping and decreases
frequency of online shopping. (pp. 23)
On their study Standing on this platform, the
rationale behind conducting this research work
lies in exploring factors behind perceived risk in
online buying in cities like Indore and thereby
confirming or disconfirming the similarities of
these factors with those earlier explored and
related to cities and countries with different stage
of development. The findings will not only add to
the literature but will also provide a basis for

Masoud, E. Y. (2013). The
Effect of Perceived Risk on
Online Shopping in Jordan.
European Journal of Business
and Management
ISSN 2222-1905 (Paper) ISSN
2222-2839 (Online) Vol.5,
No.6, 2013
future studies on perceived risk in online buying.
(pp. 23)
The result of their study is Studies in the past
have identified various dimensions of perceived
risk and their significant impact on online
shopping. Results of present study reveal that six
dimensions of consumer perceived risk having
significant impact on online shopping in Indore.
There is a dominance of risk related to product
where consumer afraid of receiving product late,
have doubts towards quality of goods delivered,
product damage in transportation and
expired/secondhand product being supplied.
Previous research also indicated that consumers
perceive risk in terms doubts in quality of product
delivered (Lee and Turban 2001). (pp. 28)
Online buying is a recent phenomenon in the
business arena. With the development of Internet
technology, business processes and procedures,
including selling, have been Pacific Business
Review International directed to explore a whole
world of business opportunities aiming at
redefining business success. Internet has created
a significant impact on the psychology and
Conclusio attitude of buyers all across the globe. It has
n of their provided new opportunities to consumers to
Study purchase goods and services virtually anytime,
anywhere. With a tremendous increase in number
of internet user in India and worldwide, there is
ample potential for marketers to offer their
products and services through this virtual
channel. But there exist a large number of
factors, which may affect the decision of buyers
to go online. Perceived risk is assumed to be one
of the important among these factors. (pp. 30)
Perceived Consumers perceived risk has been considered
Risk as a fundamental concern of decision making
process during online shopping. For the purpose
of this study, perceived risk is defined as the
potential for loss in pursuing a desired outcome
from online shopping. The study aimed to
examine the effect of perceived risks (financial
risk, product risk, time risk, delivery risk, and
information security risk) on online shopping.
(pp. 76)
Risk plays an essential role in consumer
behavior, and it makes a valuable contribution
towards explaining information-searching
behavior and consumer purchase decision
making, there are two theoretical perspectives
about risk: one that is centered on a decision
results uncertainty and another centered on the
costs or consequences of such results (Barnes et
al., 2007).(pp. 77)
Greater perception of risk on the part of
consumers' acts as a deterrent to their purchase
intentions. Several authors have observed that
the perceived risk in E-commerce has a negative
effect on shopping behavior on the Internet,
attitude toward usage behavior and intention to
adopt E-commerce (Zhang et al., 2012). (pp.77)
Forsythe and Shi (2003) proposed that private
risk, product risk and the risk of unknown origin
would impact on the online shopping and could
explain the barriers of online shopping. Previous
studies have argued that the following types of
risks are usually involved in purchase decisions:
financial risks, product risk, convenience risk,
health risk, quality risk, time risk, delivery risk,
after-sale risk, performance, psychological, social,
and privacy risk, website design style and
characteristics, and trust in the web site affect
significantly online consumers purchasing
behavior (Martin and Camarero, 2009; Tasi and
Yeh, 2010; Almousa, 2011; Javadi et al., 2012;
Zhang et al., 2012). (pp. 77)
Zhang et al. (2012) aimed to explore the
dimensions of consumers perceived risk, and
investigate their influence on online consumers
purchasing behavior. The results showed that
there are five independent dimensions, perceived
health risk, perceived quality risk, perceived time
risk, perceived delivery risk and perceived after-
sale risk affect significantly online consumers
purchasing behavior. (pp. 79)
Almousa (2011) aimed to examine the influence
of six perceived risk dimensions including,
performance, psychological, financial, social,
time, and privacy risks, associated with apparel
online shopping on purchase intention among
Saudi consumers. Results indicated that risk
perception has a strong negative influence on
apparel purchase intention. Nevertheless,
differences are observed between different risk
dimensions, where consumers perceive more
performance and time risks in apparel internet
shopping. Moreover, consumers perceive privacy
and social risks with a lesser significance than
performance and time risks on apparel internet
shopping. Alkailani and Kumar (2011) aimed to
investigate factors impacting Internet buying in
three cultures: USA, India, and Jordan, and to
understand the particular nature of differences in
 consumer characteristics impacting internet
buying in different countries and cultures. Results
indicate that in cultures where uncertainty
avoidance is high, perceived risk with internet,
buying is also high, and this impacts internet
buying negatively. Cultures where perceived risk
is high, it impacts internet buying negatively.
Results also provide valuable insights into the
nature of internet buying and the factors that
limit Internet-buying acceptance across cultures.
Tasi and Yeh (2010) aimed to study the effect of
website quality specifically product quality
information, efficiency service quality, website
design style and characteristics, and transaction
and delivery capabilities-on perceived risk of
information security and privacy and its
relationship with purchase intention. The results
show that consumers who purchase
environmentally sustainable products pay
attention to the quality of the websites from
which they purchase those products. Also, the
results showed that perceived risk of information
security and privacy involves two dimensions:
perceived ease of use and perceived usefulness.
(pp. 79)
Online Online shopping behavior (also called online
Shopping buying behavior and Internet shopping behavior)
refers to the process of purchasing products or
services via the Internet. The process consists of
five steps similar to those associated with
traditional shopping behavior (Liang and Lai,
2000). Many E-commerce studies have shown
that consumer intentions to engage in online
transactions are a significant predictor of
consumers actual participation in E-commerce
transactions, the relationship between intention
and behavior is based on the assumption that
human beings attempt to make rational decisions
based on the information available to them
(Pavlou and Fygenson, 2006). (pp. 78)
According to Masoud Today online consumers
have more control and bargaining power than
consumers of physical stores because the
Internet offers more interactivities between
consumers and product providers as well as
greater availability of information about products
and services. Compared to physical stores, online
stores have many advantages: They are
convenient and time saving and no more
traveling and waiting in lines is needed. They are
open in all time and they are accessible anytime
and anywhere. However, online stores also have
disadvantages compare to physical stores. In
online stores customers cant have any sense
about the product they see in the internet
(seeing, touching, tasting, smelling, and hearing)
as they search for and purchase products. In
online stores, consumers may develop low trust
and perceive elevated risk highly because of the
lack of face-to-face communication. Given that
online shopping is a relatively new type of
shopping method, significant changes must occur
in order to encourage more consumers to shop
online. (pp.78)
Martin and Camarero (2009) suggested a model
that reflects the determinants of trust in the web
site which include web site cognitive and
experiential signals, firm reputation, bricks-and-
mortar experience, and consumer satisfaction,
taking into account the moderating effect of
consumer-perceived risk when buying online.
Results showed Internet users who buy online
more frequently can trust a web site only based
on their previous satisfaction, whereas users who
perceive more risks need to perceive that the
firm has a good reputation and bricks-and-mortar
experience apart from other signals such the
quality of the service. (pp. 79)
Kim et al. (2008) investigated how trust and risk
affect an Internet consumers purchasing
decision. The results of the study show that
Internet consumers trust and perceived risk have
strong impacts on their purchasing decisions.
Consumer disposition to trust, reputation, privacy
concerns, security concerns, the information
quality of the Website, and the companys
reputation, have strong effects on Internet
consumers trust in the Website. Also, consumers
trust has a strong positive effect on the
purchasing intention as well as a strong negative
effect on a consumers perceived risk. This study
also provides evidence that a consumers
perceived risk reduces the consumers intention
to purchase, whereas a consumers perceived
benefit increases the consumer's purchasing
intention. (pp. 79)
Hanjun et al. (2004), in their research
investigates the differences in perceived risk
between online shoppers and non-online
shoppers, as well as online shoppers perceived
risk relating to two culturally different countries
(i.e., Korea and the United States). The study
showed a significant difference in the perceived
risk of online shopping between online shoppers
 and non-online shoppers, and a higher level of
perceived risk for those who had not experienced
online shopping than those who had purchased a
product online. The study also showed that both
American and Korean Internet users had a similar
degree of perceived risk toward online shopping.
Korean online shoppers showed higher risk
perception on social risk, while Americans
showed higher risk perception on other factors
such as time, financial, and psychological risk. On
the other hand, product-related risk factors such
as performance and physical risk were not
significantly different between both countries.
The Internet, just like any type of non-store
shopping, makes it difficult to examine physical
goods; consumers must rely upon somewhat
limited information and pictures shown on the
computer screen (Jarvenpaa and Tractinsky,
1999). Product risk is the perception that a
Product
product purchased may fail to function as
Risk
originally expected (Kim et al., 2008). And it is
the loss incurred when a brand or product does
not perform as expected, is largely due to the
shoppers inability to accurately evaluate the
quality of the product online (Bhatnagar et al.,
2000). (pp. 78)
Potential loss of delivery associated with goods
lost, goods damaged and sent to the wrong place
after shopping (Dan et al., 2007). Consumers fear
that delivery will be delayed due to various
Delivery circumstances; the delivery company wont
Risk deliver within the time frame agreed with
customers, or consumers fear that the goods may
be damaged when handled and transported, or
no proper packaging and handling during
transportation(Claudia, 2012). (pp. 78)
Time risk is the perception that time,
convenience, or effort may be wasted when a
product purchased is repaired or replaced Hanjun
et al., (2004). Time risk includes the
Time Risk
inconvenience incurred during online
transactions, often resulting from difficulty of
navigation and/or submitting orders, or delays
receiving products (Forsythe et al., 2006).
Informatio Consumers can learn about the value of
n security products through website features such as
product information quality, transaction and
delivery capability, and efficiency service quality;
however, if there is no information security
mechanisms in place, purchase intention will be
adversely affected. This information security
factor can be exploited sufficiently depending on
 Internet retailers ability to meet customers
expectations in the virtual shopping environment
(Chang and Chen, 2008). (pp. 78)
Rajeshwary, G., Sayed, S. One of the reasons cited for slower-than-
Trust and Risk in Online expected adoption in the early days of e-
Shopping. Tactful commerce was lack of trust from potential
Management Research customers, today majority of people make
Journal, ISSN: 2319-7943 purchases online and lack of trust is no longer a
barrier to transacting online. Trust, however
matters now than ever. There are many threats
Trust that jeopardize trust online including privacy,
invasion, identity, threat, spam and phishing. So
trust plays an important role across digital
channels but rather than a barrier it acts as
differentiator. The researcher in this context has
studied about the trust element and its impact on
minds of the consumers while doing online
shopping. (pp. 115)
According to Rajeshwary and Sayed Payment
Related Issues: Indian consumers have believes
cash on delivery (COD) as the most preferred way
to make payments. According to them, if an e-
vendor is ready to accept payments in COD form,
he Trust and Risk in Online Shopping 115 does
not have any wrong intentions and can be
trusted. Study shows that COD acts as an enabler
Payment even to those people who are likely to pay using
Method other payment methods like credit cards, Internet
banking etc. Some other customers feel that e-
marketers should have multiple modes of making
payments. Customers also feel that the e-vendor
should use reliable payment gateways like
Citibank payment gateway, ICICI Bank payment
gateway. Making payment through these
gateways makes them feel secure about their
payment and information. (pp.116).
Perceived risks associated with online shopping
negatively influence online purchase intention
and behavior. Some researchers examine the
Perceived
impact of various risks associated with online
Risk
shopping on online shoppers decision-making by
treating perceived risk as one one-dimensional
construct (Pires et al. 2004). (pp. 116)
According to Rajeshwary and Sayed Financial
risk pertains to the loss of money in the case of a
poor product or service choice. Financial risk is
Financial the potential loss of money associated with the
Risk item purchase. Financial risk is related to the loss
of money in the case of a bad purchase. Financial
risk is the perceived financial concern resulting
from a shopping activity. (pp. 116)
Product Product risk is defined as the loss incurred when

Time Risk
Informatio
n Security
Ariff, M. S., Sylvester, M.,
Zakuan, N., Ali, K. M. (2007).
Consumer Perceived Risk,
Attitude and Online Shopping
Behaviour; Empirical
Evidence from Malaysia. IOP
Conf. Series: Materials
Science and Engineering 58
(2014) 012007
doi:10.1088/1757-
899X/58/1/012007
a product or brand does not perform as expected.
(Linda C. Ueltschy, 2004). The Internet, just like
any type of non-store shopping, makes it difficult
Risk to examine physical goods; consumers must rely
upon somewhat limited information and pictures
shown on the computer screen (Jarvenpaa and
Tractinsky, 1999). (pp. 116)
Consumers fear that delivery will be delayed due
to various circumstances; the delivery company
wont deliver within the time frame agreed with
Delivery
customers, or consumers fear that the goods may
Risk
be damaged when handled and transported, or
no proper packaging and handling during
transportation(Claudia, 2012). (pp. 117)
Time/ convenience risk relates to the time spent
for the purchase of a product and the time
wasted in case of a poor product/service choice.
(Linda C. Ueltschy, 2004). Time risk is the
potential loss of time and effort associated with
purchasing the item (Michel Laroche, 2004). Time
is the amount of hours spent during the shopping
activity (CENGEL, 2012). (pp. 117)
Consumers can learn about the value of
products through website features such as
product information quality, transaction and
delivery capability, and efficiency service quality;
however, if there is no information security
mechanisms in place, purchase intention will be
adversely affected. This information security
factor can be exploited sufficiently depending on
internet retailers ability to meet customers
expectations in the virtual shopping environment
(Chang and Chen, 2008). (pp. 116)
Product Online purchasing is a non-store shopping, so it
Risk is difficult for consumers to examine quality of
physical goods because they can only rely on
limited information, sketches, visuals, graphics,
and pictures shown on the computer screen. As a
consequence, the purchased products may not
function as they are claimed to be. Product risk is
generally about a purchased product may fail to
function as originally expected (Kim 2010). It is
related to the product performance risk, which is
a loss for customers when a brand or product
does not perform as expected due to the
shoppers inability to accurately evaluate the
quality of the product online (Bhatnagar et al.,
2000). Several studies have shown that product
or performance risk, or the fear of product not
functioning or performing as expected is
increasing in online environment (Almousa 2011).
In short, the incapability of touching, feeling,

Mathur, N. (2015). Perceived
Risks towards Online
Shopping. International
Journal of Engineering
Development and Research,
Volume 3, Issue 2, ISSN:
2321-9939
Tanadi, T., Samadi, B.,
Gharleghi, B. (2015). The
Impact of Perceived Risks
and Perceived Benefits to
Improve an Online Intention
among Generation-Y in
Malaysia. Asian Social
Science; Vol. 11, No. 26;
2015,
doi:10.5539/ass.v11n26p226
testing or trying the products before they are
purchased are the primary concerns when
purchasing online, and those concerns will
increase the product or performance risk
perceived (Saprikis et al., 2010). (pp. 4)
Previous Studies indicated that fear of credit
Financial card fraud represents one of the most invoked
Risk concerns when buying online (Saprikis et al.,
2010). (pp. 4)
According to Marthur (2015) Privacy risk is
psychological risk and disappointment of
shopping online, which is mainly caused by the
privacy information lost. On the Internet, the
privacy information could be tracked and
Privacy
collected, and then it can be used to sharing with
Risk
third parties, in order to send spam mails or
emails. George (2002) found that a belief in the
privacy of personal information was associated
with negative attitudes toward online shopping.
(pp. 296)
Aspects involving product risk can be an inability
to compare prices, being unable to return a
Product product, not receiving a product paid for and
Risk product not performing as expected (Bhatnagar
et al., 2000; Jarvenpaa and Todd, 1997; Tan,
1999; Vijayasarathy and Jones, 2000). (pp. 297)
Delivery risk is the potential loss of delivery,
which related to good lost, damaged and sent the
product to the wrong place after customers do
Delivery
online transaction (Zhang, Tan, Xu, & Tan, 2012).
Risk
Consumers fear that during transporting, the
goods will be damaged cause of no proper
packaging (Masoud, 2013) (pp. 227)
According to George (2002), privacy risk can
affect consumers intention to make purchases
over the Internet. Once consumers have faced
unfavourable experience, then they might
reluctant to purchase online again in the future.
According to Featherman & Pavlou (2003),
privacy risk is about the potential loss of control
Privacy
over the customer personal data information.
Risk
Lots of unauthorized people used the information
without agreement and lead to misuse the
information data. In addition, another researcher
defined privacy as the degree to which extend
online shopping website is safe and protecting
the privacy of consumer data (Kyauk &
Chaipoopirutana, 2014). (pp. 228)
Time Risk According to Griffin & Viehland (2010), time risk

Dai, B., Forsythe, S. Kwon, W.
(2014). The impact of online
shopping experience on risk
perceptions and online
purchase intentions: does
product category matter?.
Journal of Electronic
Commerce Research, VOL 15,
NO 1, 2014
refers to the time needed by consumers to buy
the product and time to obtain it. Then, according
to Sim& Su (2012), time risk relates to the
potential loss of time, accessibility or effort
associated with making a bad purchasing
decision and when a product purchased needs to
be fixed. In fact, while doing online shopping,
consumers can waste their time in researching
product information. Time risks may also include
the inconvenience experience that customers
face during making online transactions,
navigating and submitting orders and delays in
getting the products (Forsythe, Liu, Shannon, &
Gardner, 2006). (pp. 228)
Product risk was found to have significant
impact on the frequency of purchasing online
[Forsythe and Shi 2003]. A relatively high level of
product risk is expected when being purchased
online, particularly for some product categories,
Product due to shoppers inability to physically examine
Risk and test product attributes online [Alreck and
Settle 2002; Garbarino and Strahilevitz 2004],
suggesting that risks associated with product
uncertainty are likely to negatively affect online
purchase intentions at least for some products
[c.f., Bhatnagar et al. 2000]. (pp. 15)
Forsythe and Shi [2003] find that although
privacy concern was a frequently cited reason for
not purchasing online, it does not significantly
Privacy
impact the frequency of purchasing online and
Risk
searching with intent to buy. Thus, the effect of
perceived privacy risk on purchase intention
remains rather unclear. (pp. 15)