Segmenting consumers based on the benefits and risks of Internet shopping

An analytical model is developed to examine the role perceived benefits and risks of online shopping play in forming consumer preferences for online shopping. Two dimensions of perceived risk are considered in the model. Product risks follow from the consumers' inability to examine products online. Security Risks follow from the consumers' fear that the open Internet network would allow their personal data to be compromised. We segment the sample based on their sensitivity to the benefits and risks of Internet shopping. The segments are profiled based on their demographics. We hypothesize how the two dimensions of risks will vary across the segment characteristics. The model is calibrated on national survey data collected online. The hypotheses were largely supported by the data. (C) 2003 Elsevier Inc. All rights reserved.