Marketers have identified many factors that influence a consumer’s purchase decision and online buying behavior (Goldsmith, Bridges, & Freiden, 2001; Jarvenpaa & Todd, 1996-97; Vellido, Lisboa & Meehan 2000).

Jarvenpaa and Todd (1996-1997) classify these factors into four clusters of purchase perceptions that influence a consumer’s purchase decision. These clusters of purchase perceptions are: Product Understanding, Shopping Experience, Customer Service, and Consumer risk.

Product understanding, often called product perception, serves as the primary determinant of where customers choose to shop (Cronin, 1996). Price, product quality, and product variety are the most influential product perceptions cited in the literature (Arnold, Handelman, & Tiger, 1996; Baker, Levy, & Grewal, 1992). Shopping experience is the second cluster of determinants and includes the attributes of time, convenience and product availability, effort, lifestyle capability and playfulness or enjoyment of the shopping process (Baty & Lee, 1995; Berkowitz, Walker, & Walton, 1979; Misra, & Rao, 2000; Hoffman & Novak, 1996; Liu, Armett, Capella & Taylor, 2001; Perterson, Albaum, & Ridgway 1989). Economic, social, performance, personal and privacy risk dimensions are typically included within consumer risk, the fourth cluster of purchase perception (Jarvenpaa & Todd, 1996-1997; Park 2001; Simpson & Lakner, 1993).

In light of the outgoing paradigm shift from the traditional retail outlet to internet based purchases for some of consumers in Indonesia, some question arises:

1. As to whether the same factors that have been found to influence traditional purchases similarity especially on the consumer risks influence internet based purchase in Indonesia?

2. And if they do not, what other factors are present or not present that influence internet based purchases?

This study seeks to answer both of these questions above by:

1. Aggregating the findings of existing research that identifies attitude, demographic, and purchase perception components

2. Creating a categorical model of purchase perception factors especially on the consumer risks factors by combining the aggregated components; and

3. Testing and validating the model through data analysis

By establishing and validating a categorical model for describing factors that affect online commodity purchases risk for a narrowly defined Indonesian specific population, this research as and when necessary can then be extended to include larger and more diverse populations to enhance its generalizability.

Refer to the problems statement above; the aims of this research are:

1. To know whether the similarities exist among factors especially on the consumer risks that have been found to influence traditional purchases are also influenced internet based purchase in Indonesia.
2. This research is also to explore what other factors related to the consumer risk are present or not present that influence internet based purchases in Indonesia.

By getting this research completed, hopefully we could have better understanding on factors influencing Indonesian consumers’ ecommerce commodity purchases in Indonesia especially related to the consumer risk, which then could be develop further and used by the business or individuals who are interested in developing internet based business targeting Indonesian market.

This research is more focusing on consumer risk using reference from the same research method used by Thomas W. Dillon and Harry L. Reif (2004). This research is also limited in scope to examining the internet purchase behavior especially on consumer risk in narrow targeted population of Indonesian internet user in Jakarta who are potentially able to make online buying of products sold on the internet or already bought product from the Internet within the year of 2008.

Due to the limitation of the sampling gathered the results are cannot viewed as the general view of Indonesian consumers online behaviors and only applicable and limited to the above researched limited sampling communities.

One of the popular webmaster forum www.adsense-id.com has 16.500 members of Indonesian publishers and 1500 active member discus and  sharing their expertise &  experience to the group. Many of them are

good and become a full time while the number of new member who wants to learn and  start to make earning from the net are growing significantly.

It is revealed that Indonesia publisher actively targeting all the market around the world, they are working hard,  learning by doing and do not hesitate to share their expertise to the forum member. Most of them are still young under 30 y.o.  Well, I just  feel amaze that  While other people are strugling due to the current market down turn and the work termination are predicted to  reach up to 13.000 person in indonesia up to enf of  2009  they can get good earning from their home from the net.

More people interested to make an earning from the net, locally some “local guru” has sees this as an business opportunities, they are offering workshop and training on how to make an earning on the net and the seats are always full.

so… we are not only big on the market size… but we also has thousands of publisher fill up your google search result.

Internet as one of popular interactive online media has experiencing a rapid user growth in Indonesia. This growth is indicated on the official statistic data published by the Indonesian Internet Service Provider Association (APJII) on their website: http://www.apjii.or.id/dokumentasi/statistik.php?lang=ind. The graph shows that by the end of 2007 APJII estimated Internet user in Indonesia has reached 2 Million subscribers with 25 million active users.

Table 1.1

Cumulative Increment of Internet Subscribers & Users in Indonesia up to 2007

Indonesian Government recently has also announced its policy to give high schools in all over Indonesia to have free internet access. The Ministry of Communication and Information Technology of Indonesia Mr. Muhammad Nuh said that with this free internet access the internet user in Indonesia will increase up to 50 million users.

The above numbers estimated will keep increase due to PT Telkom has reduced its rental network based on distance rate recently. In average the network rental by distance rate will decrease by 81%; which will make internet access in Indonesia become 20-40 % cheaper and more people could afford to subscribe and access the internet starting July 2008.

In line with the big amount and rapid growth of internet user in Indonesia, it has created new market opportunities and attracts a lot of individuals and entrepreneur to use the internet as their marketing tools to market their goods and services.

On the other hand, the study to explore and understanding factors influencing consumers’ e-commerce commodity purchases in Indonesia is still rare and not easily available while the market opportunity is huge refer to the above rapid growth of internet users in this country.