SOCIAL COMMERCE: THE EFFECTS OF TIME PRESSURE, PRODUCT POPULARITY, AND WEBSITE REPUTATION ON PURCHASE INTENTION

Abstract

Background and Purpose of Study: Social commerce refers to a form of electronic commerce based on Social Networking Service (SNS) and has grown substantially since the advent of Groupon in 2008. The growth of social commerce was accelerated with the increased popularity of SNS, where consumers share product information and reviews and the information is spread to others through SNS in real time (KB financial group, 2015).Social commerce can be divided into three types: (1) online group buying, (2) online shopping linked with the SNS, and (3) online shopping in SNS. The first type of social commerce is the most common type in Korea and the current study conducted an experiment based on the online group buying format. In the group buying social commerce, consumers gather together to purchase a product with a cheaper price. Placing a large order facilitates price promotion, (Yuan, & Lin, 2004) and buyers benefit from the cheaper price through the group buying (Zeng, Huang, & Dou, 2009). Group buying websites provides consumers with two types of information: time left for the promotion (time pressure) and the number of product sold (product popularity), and the overall purpose of this study is to examine the effects of time pressure, product popularity and website reputation on purchase intention.Hypotheses Development: Consumers make a purchase on social commerce websites because they can get a product with a cheaper price through group buying. Thus, this study is based on the assumption that all products are under price promotion. According to prospect theory, consumers are more likely to be sensitive to losses than gains. Consumers initially perceive a price promotion as a potential gain, but as the expiration approaches, they are more likely to perceive the promotion as a potential loss, which consequently increase purchase intention (Inman & McAlister, 1994). Also, a statement indicating product popularity, such as ‘the best-selling item’ increases purchase intention (Jeong & Kwon, 2012). Signaling theory provides a useful insight into understanding the effects of website reputation. Since consumers use a website reputation as an indicator of quality (Kirmani & Rao, 2000), they generally respond more positively to well-known websites than unknown websites (Shamdasani, Stanaland, & Tan, 2001). Therefore, based on the literature review, the following hypotheses are developed.H1: High time pressure has a greater impact on purchase intention than low time pressure.H2: High product popularity has a greater impact on purchase intention than low productpopularity.H3: Well-known website has a greater impact on purchase intention than unknownwebsite.H4: The effect of time pressure on purchase intention differs as a function of productpopularity.H5: The effect of time pressure on purchase intention differs as a function of websitereputation.H6: The effect of product popularity on purchase intention differs as a function ofwebsite reputation.Method: This study’s design is a 2 (time pressure: high vs. low) x 2 (popularity: high vs.low) x 2 (website reputation: well-known vs. unknown) between-subjects factorial design.This study includes three pretests: (1) to select high versus low time pressure, (2) to selectthe number of product purchased (product popularity), and (3) to select well-known andunknown social commerce websites. Based on the results of the pretests, eight mockwebsites simulating social commerce websites were developed for the main experiment.The data were collected via a research company. Invitation emails with a URL were sentto potential participants, and they were guided to shop the website and answer thequestionnaire. The measure of purchase intention was adopted from the existing literaturewith adequate reliabilities (Cronbach’s alpha >.70), and the scale items used a 7-pointscale. Manipulation checks showed that manipulations of time pressure, productpopularity, and website reputation were successful.Results: A total of 453 female online shoppers participated in the online experiment. Anexploratory factor analysis revealed one factor of purchase intention, and thereliability.93, indicating adequate internal consistency of the scale. Hypotheses weretested using analysis of variance (ANOVA). The results showed main effects for productpopularity [F (1, 445) = 10.34, p < .05] and website reputation [F (1, 445) = 72.03, p< .05] on purchase intention, supporting H2 and H3. With regard to H4 to H6 predictinginteraction effects, ANOVAs showed significant interaction effects of time pressure byproduct popularity [F (1, 445) = 5.53, p < .05], time pressure and website reputation [F (1,445) = 4.59, p < .05], and product popularity and website reputation [F (1, 445) = 9.15, p< .05] on purchase intention. Thus, H4 to H6 were supported.Conclusions and Discussion: The study offers academic and managerial implications.The findings of the study provide empirical support for the signaling theory and prospecttheory. The results suggest that high popularity and high reputation are significant factorsinfluencing purchase intention. When consumers perceive a product as being popular on asocial commerce website, they have greater purchase intention than when they do notperceive the product popularity. Also, when consumers shop on a well-known socialcommerce website, they have greater purchase intention than when they shop on anunknown website. When the product popularity is high, high time pressure is animportant factor enhancing purchase intention. When a website is well-known, high time pressure increased purchase intention. However, when a website is unknown, highproduct popularity increased purchase intention. These findings of the study contribute tothe literature in social commerce. Based on the website reputation, social commercewebsites need to incorporate appropriate marketing tactics, such as time pressure andproduct popularity to increase consumers’ purchase intention.