Perceptions believed to influence consumers’ purchase decisions are extensively researched and documented in the context of traditional consumer behavior literature. Jarvenpaa and Todd (1996-97) cluster e-commerce purchase perceptions into four general categories:

1) Product Perception
2) Shopping Experience
3) Customer Service
4) Consumer Risk.

Each of these four general factors contain multiple items which, taken together, form the basis for exploring how each of the four purchase perceptions apply to e-commerce purchases.

Product Perception

The three product perception items of price, product quality, and product variety are the most influential purchase perception issues cited in the literature (Arnold, Handelman, & Tiger, 1996; Baker, Levy & Grewal, 1992; Cronin, 1996; Liao & Cheung, 2001).
Price is defined as the total monetary cost to the consumer for the purchase or the bargaining power available to the consumer. New pricing strategies are being applied to goods and services sold over the Internet. Dynamic pricing, defined as a pricing strategy where prices change over time, based on buyer demographics, or across product bundles can be easily implemented and executed on the Internet. This contrasts with conventional retail channels where pricing changes are traditionally performed only by specific product and maybe implemented over the course of days or weeks.

Product quality is defined as those distinguishing characteristics or traits inherent in the product or service that differentiate it from competitive product or service offerings. For the purpose of clarifying this definition, service refers to the service that is being purchased and should not be confused with customer service, which is treated as a separate factor.

Product variety is the assortment of alternative and complementary goods available from the retailer. Product variety is important to shoppers because it provides them with the opportunity to compare, contrast, and select from among multiple potential solutions that meet their needs.
In a recent study, product equity, used synonymously with value by other authors, is defined as a combination of quality and price that exists in the mind of the buyer. Their results indicate that customer behavior is influenced by belief about the product value.

Shopping Experience

The shopping experience is a mixture of effort, lifestyle compatibility or perceived convenience, fun and playfulness. Web shopping compatibility, impulsiveness, satisfaction with websites, and shopping orientation are identified as positive influencers for the adoption of Internet technology for retail shopping.
When engaged in e-commerce purchases over the Internet, effort is primarily a mental activity; shoppers work at their keyboard instead of having to plan for and travel to multiple shopping sites. For e-commerce shopping, the dominant components of effort are ease of use, coupled with the ease of placing and canceling orders. These components may be described in terms of the time required to find and purchase products, the convenience of using the shopping engine or “shopping cart” as part of the purchasing process, and the availability of the desired products.

Lifestyle compatibility encompasses the buyer’s lifestyle and shopping habits. The shopping tools must be easy to use and must provide the buyer with all of the information required to make a purchase decision. If ancillary support is required, such as telephone interaction to answer personal questions, the website must facilitate this linkage, and staff must be available to provide support. Extensive telephone wait times and lack of available staff negatively impact the buyer’s perception of compatibility lifestyle. Research has found that those who have not made an e-commerce purchase categorize those who have made an e-commerce purchase as “nerds,” suggesting that lifestyle compatibility is also affected by potential buyer’s opinion of e-commerce buyers.

Playfulness and the perception of “fun” take into account the shopper’s overall satisfaction with the shopping experience. Playfulness is negatively affected by shopping sites that are cumbersome to navigate, insult the shopper’s intelligence, or do anything to diminish the shopping experience. Unnecessary shopping time and the inability to locate in-stock products of the desired color and size are examples of occurrences that diminish the shopping experience.

Customer Service

Customer service affects purchase decisions through evidence of vendor knowledge, responsiveness, and reliability. Liu and Arnett (2000) performed a factor analysis of six design quality features in order to determine factors associated with website success. Their findings show that two key customer service factors (service quality and reliability) influence Internet purchase behavior.

Vendor knowledge and responsiveness are embodied in the way that the service provider anticipates and responds promptly and effectively to customers’ needs and requests, providing customers with the knowledge needed to make purchases. An example of anticipating customers’ needs occurs when a merchant clearly states which forms of payment are acceptable, and goes on to explain differences in expected delivery times and charges for different delivery options available to the customer.

Reliability occurs when the customer perceives that there is a high probability that the service provider will deliver all of what is promised in the agreed-upon time and at the agreed-upon price. Internet purchases present new challenges in this regard when compared with traditional ‘brick-and-mortar’ retail store purchases, because consumers do not have the opportunity to physically inspect goods on the Internet prior to purchasing them. Instead, Internet purchasers must rely on mediated representations of the goods being purchased, are normally dependent on third parties for delivery of the purchased good, and may question the viability and convenience of a product return.

Consumer Risk

Consumer adoption of new retail innovations are influenced by perceived risks. Consumers must be able to trust the Internet transaction and must perceive that trust in all risk dimensions— economic, privacy, personal and performance. Economic or financial risk encompasses monetary losses associated with poor purchase decisions, the inability to return a product, and the non-receipt of a product ordered.

Personal risk refers to the possibility that the consumer will be harmed or injured by either the product or the shopping process. Koyuncu and Lien (2003) found that shoppers that successfully seek out a secure shopping environment (i.e., their home) are disposed to order more from the Internet. Credit card security is cited as the predominant example of a personal risk inherent in e-commerce purchase transactions with buyers exhibiting fears that their credit card information may be misappropriated or misused.

Privacy risk reflects the degree to which buyers may sacrifice their privacy when they are required to provide confidential information in the course of making retail e-commerce transactions. Passwords, buying history, product preferences, home addresses, email addresses, and telephone numbers are all examples of private data often collected from the Internet.

Performance risk embodies the consumer’s perception that a product or service may fail to meet expectations, the “fear of not getting what they want”.