Modeling Consumer Adoption of the Internet as a Shopping Medium: ...

Driven by perceived business advantage and significant market potential, many retailers rushed to the Internet to explore commercial opportunities in the virtual marketplace. Predictions were that retailers everywhere would adopt the Internet and its new retail format, even replacing the traditional dominance of fixed-location stores (eMarketer, 1998; Van Tassel Weitz, 1997). It was thought that consumers would readily adopt the Internet as a shopping medium, and such shopping would quickly become a mainstream activity. Furthermore, it was predicted that the combination of technological sophistication, equipment power, and ease of use, in conjunction with the supporting infrastructure, would make electronic purchasing widespread in the United States by 2005 (eMarketer, 1998; Pastore, 1998).

However, after a brief spurt in 1999, the rate of growth of Internet retailing declined, resulting in the failure of many Internet businesses. People’s enthusiasm for Internet shopping turned out to be less than originally expected (Hale, 2000; Krizner, 2001). Some paradoxical phenomena have been observed in online shopping. Although an increasing number of businesses have invested substantial resources into developing online marketing activities, the predicted sales growth and profitability goals have not been achieved. Also, although consumer usage of the Internet for shopping is increasing, fewer people than anticipated actually purchase through the Internet (Pastore, 2000).

This paradox has resulted in mixed opinions regarding the future of Internet retailing and shopping. Some people think that e-tailing was an overhyped, transient fad (e.g., Forrester Research, 2000), whereas others maintain that the impact of the Internet for retailing is still promising because it performs a supporting role for existing marketing activity (e.g., Giga Information Group, 2000; Hazel, 1996).