1413. study of changing attitude of indian consumers towards online shopping
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Dissertation Report
On
CONSUMER PERCEPTION ON ONLINE SHOPPING
By
SHIKHAMBA-IV sem0903870045
Under the Supervision ofProf. Neha P. Shrotiya
ITS, Mohan NagarGhaziabad
In Partial Fulfillment of Award of Master of Business Administration
1
DECLARATION
I, Gurmeet Singh student of Masters of Business Administration from Amity Business
School, Amity University Uttar Pradesh hereby declare that I have completed Dissertation on “
STUDY OF CHANGING ATTITUDE OF INDIAN CONSUMERS TOWARDS ONLINE SHOPPING
” as part of the course requirement.
I further declare that the information presented in this project is true and original to the best of my
knowledge.
24/03/09 Gurmeet Singh
Noida A0101907148
MBA (G) 2007-09
2
CERTIFICATE
I Ms.Rushina Singhi hereby certify that Gurmeet Singh, student of Masters of Business Administration
at Amity Business School, Amity University Uttar Pradesh has completed dissertation on “Study of
changing attitude of Indian consumers towards
online shopping”, under my guidance.
This Dissertation is prepared in partial fulfillment of Master of Business Administration to be awarded
by Amity University, Uttar Pradesh.
To the best of my knowledge, this piece of work is original and no part of this report has been
submitted to any other Institute/University earlier.
Date Ms.Rushina Singhi
Lecturer
Amity Business School
Amity University
3
ACKNOWLEDGEMENT
I express my sincere gratitude to my Dissertation Guide, Ms. Rushina Singhi for his constant
support and guidance. Without his help and cooperation, this project would not have been
successfully completed
I owe my enormous intellectual debt towards my guide, who have augmented my knowledge
in the field of Marketing
I thank all the respondents, without whose cooperation, the project would not have been
successful.
I am also indebted to my parents and friends for their direct or indirect support and
cooperation.
Gurmeet Singh
A0101907148
MBA (G)
BATCH OF 2009
4
ABSTRACT
The growing use of Internet in India provides a developing prospect for online shopping. If
E-marketers know the factors affecting online Indian behavior, and the relationships between
these factors and the type of online buyers, and then they can further develop their marketing
strategies to convert potential customers into active ones, while retaining existent online
customers. This project is a part of study, and focuses on factors which online Indian buyers keep
in mind while shopping online.
This research found that information, perceived usefulness; ease of use; perceived enjoyment and
security/privacy are the five dominant factors, which influence consumer perceptions of online
purchasing.
A model was developed indicating online shopping behavior and acceptance among customers in
India. The model was tested with a survey sample (n=150). Factor analysis technique in SPSS
was used to classify these factors which buyers keep in mind while shopping online.
5
CHAPTER -1
INTRODUCTION
Internet is changing the way consumers shop and buys goods and services, and has rapidly
evolved into a global phenomenon. Many companies have started using the Internet with the aim
of cutting marketing costs, thereby reducing the price of their products and services in order to
stay ahead in highly competitive markets. Companies also use the Internet to convey,
communicate and disseminate information, to sell the product, to take feed back and also to
conduct satisfaction surveys with customers.
Customers use the Internet not only to buy the product online, but also to compare prices,
product features and after sale service facilities they will receive if they purchase the product
from a particular store. Many experts are optimistic about the prospect of online business.
In addition to the tremendous potential of the E-commerce market, the Internet provides a unique
opportunity for companies to more efficiently reach existing and potential customers. Although
most of the revenue of online transactions comes from business-to-business commerce, the
practitioners of business-to-consumer commerce should not lose confidence.
It has been more than a decade since business-to-consumer E-commerce first evolved. Scholars
and practitioners of electronic commerce constantly strive to gain an improved insight into
consumer behavior in cyberspace. Along with the development of E-retailing, researchers
continue to explain E-consumers’ behavior from different perspectives. Many of their studies
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have posited new emergent factors or assumptions that are based on the traditional models of
consumer behavior, and then examine their validity in the Internet context.
Online shopping in India
It is a fact that a great online shopping revolution is expected in India in the coming years. There
is a huge purchasing power of a youth population aged 18-40 in the urban area.
If we observe the growth of Indian online transactions (Info by: IAMAI), it is getting doubled
year by year.
The usage of internet in India is only 4% of the total population. This is also getting increased
day by day as the costs of computers are decreasing and net penetration is increasing. The cost of
internet usage is also getting lower, with good competition among the providers. Wi-Fi &
Wimax is also getting tested in Bangalore and other cities in India. This will increase the usage
as it goes more on wireless internet.
Indians are proving every time that they can beat the world when it comes to figures of online
shopping. More and more Indians are going to online shopping and the frequency of India’s
online buying is crossing the overall global averages.
7
Factors That Boost Online Shopping in India
Rapid growth of cybercafés across India
Access to Information
The increase in number of computer users
Reach to net services through broadband
Middle-class population with spending power is growing. There are about 200 million
of middle-class population good spending powers. These people have very little time
to spend for shopping. Many of them have started to depend on internet to satisfy their
shopping desires.
.
Few Facts about Online Shopping
The figures from IAMAI show that the internet users in India will grow to 200 million by 2010.
Around 25% of regular shoppers in India are in the 18-25 age groups, and 46% are in the 26-35-
year range.
Indian online matrimonial sector is worth around $230 million.
Worldwide e-commerce is only growing at the rate of 28%, since India being a younger
market, the growth of e-commerce is expected at 51% in the coming years.
8
Inline with global trends finally India has also started shopping online these days. As per
the study by IAMAI online shopping in India has rose from $11million in 1999-2000 to
$522 million in 2008 and it is expected to rise above $700 million by end March 2010.
Indians are also Shopaholics like other Asians. There is a strong booming young adult
population in India with good levels of disposable income.
IN INDIA
- Over $50 Billion and growing rapidly - Most popular online shopping products include: books
(45%), electronic gadgets (42%), railway tickets (38%), accessories apparel (35%), apparel
(35%), gifts (34%), computer and peripherals (32%), airline tickets (28%), music downloads
(21%), movie downloads (21%), hotel rooms (22%), magazines (18%), tools (16%), home
appliances (16%), toys (16%), jewelry (17%), movie ticket (15%), beauty products (12%), health
and fitness products (12%), apparel gift certificates( 11%) and sporting goods (7%).
There are over 120 million people online in India and this is expected to grow to 200 Million by
the end of 2010
.
CHAPTER-29
LITERATURE REVIEW
The current literature on consumer online purchasing decisions has mainly concentrated on
identifying the factors which affect the willingness of consumers to engage in Internet shopping.
In the domain of consumer behavior research, there are general models of buying behavior that
depict the process which consumers use in making a purchase decision. These models are very
important to marketers as they have the ability to explain and predict consumers’ purchase
behavior.
The classic consumer purchasing decision-making theory can be characterized as a continuum
extending from routine problem-solving behaviors, through to limited problem-solving behaviors
and then towards extensive problem-solving behaviors [Schiff man et al., 2001].
The traditional framework for analysis of the buyer decision process is a five-step model. Given
the model, the consumer progresses firstly from a state of felt deprivation (problem recognition),
to the search for information on problem solutions. The information gathered provides the basis
for the evaluation of alternatives. Finally, post-purchase behavior is critical in the marketing
perspective, as it eventually affects consumers’ perception of satisfaction/dissatisfaction with the
product/service.
This classic five stage model comprises the essence of consumer behavior under most contexts.
Nevertheless, the management of marketing issues at each stage in the virtual environment has to
be resolved by individual E-marketers. Peterson et al. [1997] commented that it is an early stage
in Internet development in terms of building an appropriate dedicated model of consumer buying
10
behavior. Decision sequences will be influenced by the starting point of the consumer, the
relevant market structures and the characteristics of the product in question. Consumers' attitude
towards online shopping is a prominent factor affecting actual buying behavior. Source:
Jarvenpaa Journal of Electronic Commerce Research, VOL. 6, and NO.2, 2005
Todd [1997] proposed a model of attitudes and shopping intention towards Internet shopping in
general. The model included several indicators, belonging to four major categories; the value of
the product, the shopping experience, the quality of service offered by the website and the risk
perceptions of Internet retail shopping. In the research conducted by Vellido et al. [2000], nine
factors associated with users' perception of online shopping were extracted. Among those factors
the risk perception of users was demonstrated to be the main discriminator between people
buying online and people not buying online.
Other discriminating factors were; control over, and convenience of, the shopping process,
affordability of merchandise, customer service and ease of use of the shopping site. In another
study, Jarvenpaa et al. [2000] tested a model of consumer attitude towards specific webbase
stores, in which perceptions of the store's reputation and size were assumed to affect consumer
trust of the retailer. The level of trust was positively related to the attitude toward the store, and
inversely related to the perception of the risks involved in buying from that store. Jarvenpaa et al.
[2000] concluded that the attitude and the risk perception affected the consumer's intention to
buy from the store.
Consumer risk perceptions and concerns regarding online shopping are mainly related to aspects
involving the privacy and security of personal information, the security of online transaction
11
systems and the uncertainty of product quality. Trust is interwoven with risk [McAllister, 1995].
One of the consequences of trust is that it reduces the consumer’s perception of risk associated
with opportunistic behavior by the seller [Ganesan, 1994]. Lack of trust is frequently reported as
the reason for consumers not purchasing from Internet shops, as trust is regarded as an important
factor under conditions of uncertainty and risk in traditional theories.
Mayer et al. [1995] developed a model which combines traditional marketing philosophy on
consumer motivation to buy and the trust model. In this model, trust propensity; which is a
personality trait possessed by buyers; is an important antecedent of trust. In Internet shopping,
there is not much information available to the buyer regarding the seller, prior to purchase. A
buyer with a high propensity to trust will more likely be a potential customer than a buyer with a
lower propensity. Mayer et al. [1995] proposed that ability, benevolence and integrity constitute
the main elements of trustworthiness. Ability refers to skills, competencies and characteristics
that a seller has in a specific domain. In this context, sellers need to convince buyers of the
competence of their companies in the Internet shopping business. Benevolence is the extent to
which the seller is perceived by the buyer as wanting to ‘do well’. Sellers have to convince
buyers that they genuinely want to do good things for buyers, rather than just maximize profit.
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CHAPTER-3
Project Profile
Problem Definition
Online selling can be a very effective tool for a marketer to reach his customers. But at present
the marketer does not know the attitude of consumers towards online shopping and what are the
factors that shape the consumer’s attitude towards online shopping. Also what are key concerns
from the point of view of consumer while online shopping? If the marketer gets to know these
factors, then he really can use internet in the most effective manner to market his products. So
this study makes attempts to solve this problem.
Objectives of the Study
The objective of this study is to synthesize the representative existing literature on consumer
online shopping attitudes and behavior based on an analytical literature review. In doing so, this
study attempts to provide a comprehensive picture of the status of this subfield and point out
limitations and areas for future research.
The purpose of this research study is to investigate online consumer behavior, which in turn
provides E-marketers with a constructional framework for fine-tuning their E-businesses’
strategies. The specific objectives of this research are:
1. To identify key factors influencing online shopping purchase behavior.
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2. To identify the factors that can explain the differences in online buying behavior among
different online buyers.
3. To study the consumer’s attitude towards mobile advertising
Scope of the Study
1. The Study was conducted among the Internet users.
2. The Geographical area covered was Sec-18 Noida, Sec-29 Noida, Cannaught place, Karol
Baugh, Delhi.
3. The Study was based on a Schedule of Questions.
Rationale of Study
Selling on internet has a large potential due to the very high targeting possibilities As a result of
this exceptional development, the online selling industry is becoming interested in the use of
internet to reach their customers. Hence a better understanding of online shopping is critical to
the effective use of this channel of approach to the consumer. It is especially important to know
what is the consumers’ attitude towards online shopping, benefits perceived by them and what
factors attract them towards online shopping.
15
16
CHAPTER -4
Research Methodology
Phase 1: Problem definition:
Online selling can be a very effective tool for a marketer to reach his customers. But at present
the marketer does not know the attitude of consumers towards online shopping and what are the
factors which shape the consumer’s attitude towards online shopping. Also what are key
concerns from the point of view of consumer while online shopping? If the marketer gets to
know these factors, then he really can use internet in the most effective manner to market his
products. So this study makes attempts to solve this problem.
Phase 2: Determination of information needs and sources:
The following was the information required:
What is consumer’s attitude towards online shopping?
What are the key concern areas for consumers while online shopping?
Which factors shape the consumer’s attitude towards online shopping?
How has been recent shift taking place in online shopping?
Phase 3: Research Framework:
Eleven different factors were identified by studying the existing models of consumer
attitudes(Refer Annexure3,4 & 5 ) that play an important role in online purchase, then a model
was proposed leading to online shopping.
17
The data was collected only through Questionnaires. The sample size was 150. And random
sampling was done among the internet users. The analysis of the data was carried out using SPSS
software and the various tools used were Cross Tabs, and Factor analysis,
PROPOSED MODEL
After examining the 10 empirical studies, we identify a total of eleven interrelated factors for
which the empirical evidences show significant relationships. These ten factors are perceived
usefulness, perceived ease of use, perceived enjoyment, information on online shopping, security
and privacy, quality of internet connection, attitude towards online shopping, intention to shop
online, online shopping decision making, online purchasing, and consumer satisfaction.
Six (perceived usefulness, perceived ease of use, perceived enjoyment, information on online
shopping, security and privacy, quality of internet connection )are found to be ordinarily
independent and five (attitude toward online shopping, intention to shop online, decision making,
online purchasing, and consumer satisfaction) are ordinarily dependent variables.
Consumer satisfaction is considered to be a separate factor in this study. It can occur at all
possible stages depending on consumer’s involvement during the online shopping process. The
relationships between satisfaction, attitude, intention, decision making and online purchasing are
proposed to be two-way relationships due to the reciprocal influences of each on the other. In
addition, three of the antecedents, perceived usefulness, perceived ease of use, perceived
enjoyment , have been found to have direct impact on consumer satisfaction.
18
Perceived Usefulness
Perceived usefulness is defined as the degree to which a person believes that using a particular
system would increase his or her job performance. It is an important factor affecting acceptance
of an information system, because the ultimate aim of any person is the superior job
performance.
Perceived Ease of Use
This is an important factor that affects the acceptance of a particular information system. It is
defined as the degree to which a person believes that using a particular information system
would be free of effort. Hence an application perceived to be easier to use would more likely be
accepted by the user.
Perceived Enjoyment
Enjoyment refers to the extent to which the activity of using a computer is perceived to be
enjoyable in its own rights. This is seen as an intrinsic source of motivation to use a particular
application.
Amount of Information
Amount of information is defined as the information which is available for the product which a
person wants to buy through online shopping. This factor eases the decision of the user to
19
actually buy the product or not, or which product to buy. This factor becomes even more
important in case of High Involvement product.
Security and Privacy
Security and privacy are the main factors which hinder the growth of online shopping. The user
is concerned about his ID and Password which can be stolen by persons with wrong intentions
and then misuse it. At the same time they are concerned that their personal information may be
sold to the third party which poses a serious threat to their privacy.
Quality of Internet Connection
Not only is the presence of internet connection necessary but also its Quality is important to shop
online. This is an important factor which determines whether the user would shop online or not
because presence of internet is a basic necessity for this mode of shopping
Attitude towards online shopping
Consumer’s attitudes toward online shopping have gained a great deal of attention in the
empirical literature. It is believed that consumer attitudes will affect intention to shop online and
eventually whether a transaction is made. It refers to:-
1) The consumer’s acceptance of the Internet as a shopping channel
2) Consumer attitudes toward a specific Internet store (i.e., to what extent consumers think that
shopping at this store is appealing).
Intention to shop online
20
Consumer’s intention to shop online refers to their willingness to make purchases in an Internet
store. Commonly, this factor is measured by consumer’s willingness to buy and to return for
additional purchases. The latter also contributes to customer loyalty. Consumer’s intention to
shop online is positively associated with attitude towards Internet buying, and influences their
decision-making and purchasing behavior. In addition, there is evidence of reciprocal influence
between intention to shop online and customer satisfaction.
Online shopping decision making
Online shopping decision-making includes information seeking, comparison of alternatives, and
choice making. The results bearing on this factor directly influence consumer’s purchasing
behavior. In addition, there appears to be an impact on user’s satisfaction. Though it is important,
there are only five studies that include it.
According to Haubl and Trifts (2000), potential consumers appear to use a two-stage process in
reaching purchase decisions.
Initially, consumers typically screen a large set of products in order to identify a subset of
promising alternatives that appears to meet their needs. They then evaluate the subset in greater
depth, performing relative comparisons across products based on some desirable attributes and
make a purchase decision.
Online purchasing
This is the most substantial step in online shopping activities, with most empirical research using
measures of frequency (or number) of purchases and value of online purchases as measures of
online purchasing; other less commonly used measures are unplanned purchases
21
Online purchasing is reported to be strongly associated with the factors of personal
characteristics, vendor/service/product characteristics, website quality, attitudes toward online
shopping, intention to shop online, and decision making (Andrade 2000;
Bellman et al. 1999)
Consumer satisfaction
It can be defined as the extent to which consumer’s perceptions of the online shopping
experience confirm their expectations. Most consumers form expectations of the product, vendor,
service, and quality of the website that they patronize before engaging in online shopping
activities.
These expectations influence their attitudes and intentions to shop at a certain Internet store, and
consequently their decision-making processes and purchasing behavior. If expectations are met,
customers achieve a high degree of satisfaction, which influences their online shopping attitudes,
intentions, decisions, and purchasing activity positively. In contrast, dissatisfaction is negatively
associated with these four variables (Ho and Wu 1999; Jahng et al. 2001; Kim et al. 2001).
22
Phase 4: Sampling Design:
Sample Universe
The sample universe includes the people of NCR region.
Sample Size
The sample size of the participants was of 150 customers
Information on online shopping
Security & Privacy
Perceived Usefulness
Perceived Ease of use
Attitude towards online shopping
Intention to shop online
Decision Making
Online Purchase
CONSUMER SATISFACTION
Perceived Enjoyment
23
Phase 5: Data Collection:
A Survey method was undertaken to complete this project. For this Structured Questionnaire was
designed using various scaling techniques. The Questionnaire (shown in Annexure) was used
mainly to test the model proposed for Attitude towards online shopping. Likert five point scales
ranging from Strongly Agree to strongly disagree was used as a basis of Questions. The data
collection was done over a period of 8 weeks
This was done by going directly to the respondents or through mails.
24
CHAPTER-5
ANALYSIS
The Research was conducted by mode of questionnaire and respondents obtained following
results after analyzing the sample size of 150 questionnaires. The analysis was done using factor
analysis and cross tabs.
FACTOR ANALYSIS
1) FOR FACTORS AFFECTING ONLINE SHOPPING
Respondents were asked to rate the factors influencing online shopping purchase behavior. In all
six different factors were taken in questionnaire for getting the responses of consumers .Here are
those factors:
Information about online products and services
Perceived usefulness
Ease of use
Perceived enjoyment
Security
25
Quality of internet
Factor analysis was done using SPSS to extract the most important benefits derived by
customers’ point of view from the usage of online shopping.
RESULTS OF FACTOR ANALYSIS
KMO AND BARTLETT'S TEST
Kaiser-Meyer-Olkin Measure of
Sampling Adequacy..667
Bartlett's Test of
Sphericity
Approx. Chi-
Square83.193
df 15
Sig. .000
26
Communalities
Initial Extraction
Information1.000 .572
Percieved
usefulness 1.000 .675
Ease of use1.000 .763
Percieved
enjoyment1.000 .812
Security1.000 .260
Quality of internet
connection1.000 .673
Extraction Method: Principal Component Analysis.
27
Total Variance Explained
Compo
nent
Initial Eigenvalues
Extraction Sums of
Squared Loadings
Rotation Sums of Squared
Loadings
Total
% of
Varianc
e
Cumulat
ive % Total
% of
Varianc
e
Cumulat
ive % Total
% of
Varianc
e
Cumulat
ive %
1 2.571 42.853 42.853 2.571 42.853 42.853 2.417 40.276 40.276
2 1.184 19.732 72.584 1.184 19.732 72.584 1.338 22.308 72.584
3 .970 16.162 78.746
4 .695 11.592 90.338
5 .350 5.840 96.178
6 .229 3.822 100.000
Extraction Method: Principal Component Analysis.
Component Matrix (a)
28
Component
1 2
Information.563 .505
Percieved
usefulness .797 .201
Ease of use.836 -.253
Percieved
enjoyment .886 -.166
Security.365 -.355
Quality of internet
connection.054 .819
Extraction Method: Principal Component Analysis.
a 2 components extracted.
29
Rotated Component Matrix(a)
Component
1 2
Information.362 .664
Percieved
usefulness .684 .456
Ease of use.873 .040
Percieved
enjoyment .890 .139
Security.463 -.213
Quality of internet
connection-.222 .790
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a Rotation converged in 3 iterations.
30
Component Transformation Matrix
Componen
t 1 2
1 .943 .334
2 -.334 .943
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
Interpretation:
The value of KMO test is coming out to be 0.667, which suggests the validity for factor analysis.
The principal component analysis is giving 72.584 as commutative % which is good enough
because data redundancy is less. Two components have been extracted with Eigen values more
than 1 after principal component analysis and rotated component analysis.
The output value shows that following factors can be safely extracted after factor analysis:
Information about online products and services(Extracted from component 2)
Perceived usefulness (Extracted from component 1)
31
Ease of use(Extracted from component 1)
Perceived enjoyment(Extracted from component 1)
2) FOR FACTORS CONCERNING ONLINE SHOPPING
Respondents were asked to rate the factors of concern for online shopping purchase behaviour.In all
six different factors were taken in questionnaire for getting the responses of consumers .Here are those
factors:
Not sure of product quality
Cannot bargain/negotiate
Not sure of security of transactions/credit card misuse
Need to touch and feel the product
Significant discounts are not there
Have to wait for delivery
32
Total Variance Explained
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings Rotation Sums of Squared Loadings
Total
% of
Variance
Cumulative
% Total
% of
Variance
Cumulative
% Total % of Variance Cumulative %
1 2.437 40.625 40.625 2.437 40.625 40.625 2.418 40.292 40.292
2 1.226 20.428 61.052 1.226 20.428 61.052 1.221 20.357 60.649
3 1.021 17.013 78.065 1.021 17.013 78.065 1.045 17.416 78.065
4 .809 13.491 91.556
5 .507 8.444 100.000
6 -2.182E-
16-3.636E-15 100.000
Extraction Method: Principal Component
Analysis.
RESULTS OF FACTOR ANALYSIS
33
Component Matrixa
Component
1 2 3
not sure of product quality .964 -.004 .055
cannot bargain/negotiate -.161 -.721 .235
not sure of security of
transactions/credit card mis use.964 -.004 .055
need to touch and feel the
product.145 .211 .933
significant discounts are not
there-.024 .796 -.092
have to wait for delivery .728 -.165 -.284
Extraction Method: Principal Component Analysis.
a. 3 components extracted.
34
Rotated Component Matrixa
Component
1 2 3
not sure of product quality .953 .050 .152
cannot bargain/negotiate-.115
-.765.059
not sure of security of
transactions/credit card mis use.953 .050 .152
need to touch and feel the
product.046 .010 .966
significant discounts are not
there-.087 .793 .077
have to wait for delivery .762 -.048 -.236
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 4 iterations.
35
Component Transformation Matrix
Compon
ent 1 2 3
1 .992 .069 .103
2 -.089 .973 .213
3 -.085 -.220 .972
Extraction Method: Principal Component
Analysis.
Rotation Method: Varimax with Kaiser
Normalization.
36
Interpretation:
The principal component analysis is giving 78.065 as commutative % which is good enough
because data redundancy is less.
Three components have been extracted with eigen values more than 1 after principal component
analysis and rotated component analysis.
The output value shows that following factors can be safely extracted after factor analysis:
Not sure of product quality (Extracted from component 1)
Transactions/credit card misuse (Extracted from component 1)
Have to wait for delivery (Extracted from component 1)
Significant discounts are not there (Extracted from component 2)
37
CROSS TABS
1) BETWEEN TIME OF LAST PURCHASE AND METHOD OF PAYMENT
Interpretation:
The most common method of payment is by debit card/credit card for the purchase over internet
irrespective of the time of purchase of internet. Second most common method is cash on
delivery.
38
2) BETWEEN TIME OF LAST PURCHASE AND DECISION FACTOR FOR
SELECTING SITE FOR SHOPPING ONLINE
39
Interpretation:
The most common factor for making decision for online purchase is through information by
search engine. Also when people come across any special offer that helps in decision making for
online purchase.
3) BETWEEN TIME OF LAST PURCHASE AND AGE GROUP
40
Interpretation:
People below the age group of 40 are more actively involved in online shopping. That means
youngsters are getting attracted towards concept of online shopping.
4) BETWEEN TIME OF LAST PURCHASE AND MONTHLY INCOME
41
Interpretation:
People earning between Rs. 20,000-50,000 is more keen towards online shopping. This explains
the fact why online shopping is becoming popular amongst younger workforce earning between
20k-50k.
42
LIMITATIONS OF THIS STUDY
Limitation of the study is the selection of the existing studies. Owing to time limitation, only a
few number of journals were searched. This may leave some other prominent empirical studies
out. In addition, owing to the multidisciplinary nature of online shopping, it would be very
interesting to compare IS literature to other disciplines that study online shopping attitudes and
behavior.
IMPLICATIONS AND RECOMMENDATIONS FOR FUTURE
RESEARCH
As the proposed model indicates, three out of the five dependent variables (consumer attitudes,
intentions, and purchasing behavior) and three out of the five independent variables (perceived
usefulness, perceived ease of use, perceived enjoyment, information on online shopping, security
and privacy, quality of internet connection) receive the most attention. This seems to constitute
the main stream of research in this area. It is found that personal characteristics such as
vender/service/product characteristics and website quality significantly affect online shopping
attitudes, intention, and behavior.
The role of the external environment, demographics, online shopping decision making, and
consumer satisfaction are less well represented in the proposed model.. Any number of factors,
including vender/service/product characteristics, website quality, attitude towards online
shopping, intention to online shopping, online shopping decision making, and online purchasing,
may influence consumer’s satisfaction. More importantly, the extent to which customers are
43
satisfied is directly related to attitudes toward online shopping or toward specific Internet stores.
The relative importance of this factor in determining such consumer behavior as repeat purchases
suggests that further research on consumer satisfaction with online shopping needs to be
conducted.
GENERAL DISCUSSIONS
CHANGING ATTITUDE TOWARDS ONLINE SHOPPING:
Malls malls springing up everywhere and yet people are e-shopping! And not in small numbers
either. E-commerce figures are going through the roof, according to Assocham (Associated
Chambers of Commerce & Industry of India). Today (2008-09) the figures are touching Rs. 2200
crore, but are expected to increase by 150 percent by 2009-10 - to Rs 5,500 crores! And two
metros - Delhi and Mumbai are driving the growth:
LOGGING ONTO E-SALES
CITY Share in 08-09 Projection for 09-10
Mumbai 24% 40%
Delhi 20% 30%
44
Chennai 7% 11-12%
Kolkata 7% 10-11%
Bangalore 6% 9%
It was never thought that Indians would go in for e-shopping in such a big way. Ticketing, travel
bookings and even books and movies seem fine to buy online. Knowing that in India sizes vary
from brand to brand and quality is inconsistent, even of some electronic items, how is it that
there are people buying these items online?
Well, Assocham says that books are the hottest selling item on the internet. In fact most products
bought and sold off online are: books, electronic gadgets and railway tickets. However, people
are also buying clothes; gifts, computer and peripherals, and a few are buying home tools and
products, home appliances, toys, jewelry, beauty products and health and fitness products.
Traffic for e-commerce sites is mostly coming from the two metros of Delhi and Mumbai.
Here are few reasons for this:
1. Convenience
It is the major reason. Both the cities are spread out over a large area and the best stores in
both these cities are often concentrated in certain ‘posh’ areas. In Mumbai for example
there are certain items you get only in Crawford market which is at the other end of town in
South Mumbai. And demographics show that the population of Mumbai is now
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concentrated in the suburbs. Of course, huge malls have come up in the suburbs as well,
and India’s biggest mall Nirmal Lifestyle is in far-flung Mulund but often you find a better
choice of sizes and styles choice in other malls, say Phoenix (central Mumbai). And though
both Mumbai and Delhi have transport system, few people like to travel for two hours just
to get to a shop at the other end of town. Clearly the transport systems leave much to be
desired. In Delhi, safety is also an issue for women traveling alone in the evenings.
2. Literacy Rate and the Cities’ Internet Savvy Population
Most cities in India have a higher literacy rate as compared to the national average of 64.8
percent. In fact Mumbai has a highest literacy even amongst the cities (86 per cent). Delhi
too has a high literate population (81.2 per cent). Oddly, although Bangalore has a higher
literacy rate than Delhi, at 83 per cent, the city’s share of e-commerce is not very high.
Kolkatta too has a literacy rate (80.8 per cent) and so does Chennai (80.1 percent.) If one
compares these rates to literacy rates of cities like Patna (62.9 percent), Jaipur (67 percent),
Indore (72 percent) or Warangal (73 percent) its clear why its the metros which are going
to continue to lead e-shopping.
3 .Home delivery concept
In any case, home delivery is a concept that Indians are familiar with and love. The mall craze
has started only now. Earlier it was a choice between sweating it out in small crowded markets,
or asking a friendly neighbourhood kirana (grocer) to deliver groceries home and this system is
still thriving.
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4. Increase in the Internet users
Increasing penetration of Internet connectivity and PCs has led to an increase in the
Internet users across India. The demographic segments that have witnessed maximum
growth comprise college going students and young persons. These segments are the users
of advanced applications and technologies online and are most likely to be heavy E-
Commerce users.
5. Increase in the number of buyers and sellers
The success of a marketplace depends on the presence of a large number of buyers and a
large number of sellers. In addition to online buyers, many offline stores have begun to sell
their products in the online marketplace. The greater the number of sellers and buyers, the
faster the market grows.
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PRODUCT PREFERENCES CITY WISE
Bangalore loves to buy books, electronic gadgets, computer peripherals, gifts movies,
bookings, actually just about everything.
Well, Kolkatta prefers to buy music and movies online
Mumbai leads in all categories, except jewellery.
Delhites seem to prefer buying jewellery online as compared to any other city
Indian E-Comm. Report Finds Heavy Spenders Driving Sales
By Devin Comiskey
August 16, 2008
A Survey by Indian research organization Juxtconsult found that more and more Indian Internet
users are opening their wallets online. While such hurdles as limited broadband access and
security concerns remain, the report finds there are currently more than 10 million shoppers
online in India. While current trends point to increased e-commerce growth in India, the online
marketplace in the country of more than 1 billion people is still relatively small.
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Juxtconsult's survey found that 40 percent of all urban Internet users buy online, while 42
percent of the sales originate through just five percent of consumers. The survey was conducted
in April 2008and sampled more than 30,000 users.
"This section of buyers spends 5,000 rupees or more per month on the net," states the report. "It
is interesting to note that two out of every three heavy spenders are also 'netholics,' those who are
on the net for more than three hours per day...Of all those who buy online, only 25 percent are
spending more than 1,000 rupees per month while the (remaining) 75 percent bill less than 1,000
rupees per month." (1,000 Indian rupees is currently equal to approximately $23 US.)
The report also found that buying and search patterns among Indians differ between genders.
"While 43 percent of male users buy online, only 31 percent of urban female users are consumers
as well. Women tend to search more. Defying their more common attitude towards shopping,
women are more guarded when it comes to the online market," says Juxtconsult.
"Depending on the product type, nine percent to 25 percent are buying online, whereas 33 to 47
percent are searching the net for product information," it says.
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SECURITY FEARS PERSIST
Juxtconsult says the motivation for Indian users to make purchases online varies, but users fear
compromised personal information is still a great risk when it comes to e-commerce.
"The single biggest motivation for buying online for net users is saving time. Thirty-two percent
of them look to shop online with this purpose. Convenience of shopping '24x7' and home
delivery are other major incentives," says the report. "However, the concern of possible misuse
of credit car or personal information is extremely significant among online buyers, with almost
55 percent of them voicing their concern. Clearly, tackling and countering the issue of online
safety figures as an imminent challenge for net marketers."
Books, CDs Top the List
The products that are purchased most online in India, according to Juxtconsult, are books and
CDs - making up 25 percent of all online purchases.
"Ironically, computer hardware and software, despite having the home advantage are among one
of the least bought products online, with only 13 percent buying them," says the report.
"In sum, the online market in India is blossoming but is yet to take off in a considerable way.
The Internet is still being used more for searching than buying products and services. Though a
noticeable proportion of net users are also net consumers, essentially, at present only a small
tribe among them is driving online shopping momentum," says Juxtconsult.
LATEST
A new trend in this space is that of Meta search engines. Ixigo and Ezeego are two
players in this space. A Meta search engine searches all the online travel sites (including
the airlines sites as well) and displays the best deals for the user.
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Travel websites, such as Make My Trip India Pvt. Ltd and Yatra Online Pvt. Ltd, are
battling to win over India’s Rs16,000 crore ($400 million) religious travel market
Opportunity in Online Travel Industry: $2billion
Online travel company MakeMyTrip (MMT) has recorded sales of Rs. 1000 crore for the
financial year ending March 2008, as per a release.
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CHAPTER-6
CONCLUSION & SUGGESTIONS
CONCLUSION:
Increased Internet penetration, a hassle free shopping environment and high levels of Net
savviness see more and more Indians shopping online. .
BARRIERS TO GROWTH OF ONLINE MARKET
Consumer Bias
Consumers often display a bias for brands that they know well and have had a good experience
in the past. Thus products of brands with a favorable bias will score over the products of less
popular brands. A few would risk buying expensive jewelry from an unknown jeweler online.
Lack of ‘Touch –Feel-Try’ Experience
The customer is not sure of the quality of the product unless it is delivered to him and post
delivery of the product, it is sometimes a lengthy process to get a faulty or the unsuitable product
changed. Thus, unless the deliverables are as per the customers expectations, it is hard to infuse
more credibility in the e-Tailing market.
Mounting Competitive Pressures
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To attract customers, the competing online players are adopting all means to provide products
and services at the lowest prices. This has resulted in making the consumers choice-spoilt, who
in turn surf various websites to spot the lowest price for the product. Thus, although the number
of transactions is increasing, the value of the products sold is continuously falling owning to high
competition and leaner margins.
Seasonality
E-Tailing Market is faced by seasonal fluctuations. As told by an Industry player, “August to
February is the peak seasons for sale, while March to July is the dry seasons for sale”. During the
peak season, occasions that drive the sales are Diwali, Rakhi, Valentines Day, New Year,
Christmas, Mother’s Day, Friendship Day etc are. On these occasions younger generations
prefers buying and sending gifts online.
Credibility in Payment System
Online frauds and breach are the biggest barriers to online sales. As a result, prospective buyers
prefer staying away from revealing their credit card and bank details.
Untimely Delivery of Products
It might take a few minutes to search, book and pay for products and services online, but the
delivery of the product may take unreasonable time.
It is a challenge for E-marketers to convert low frequency online buyers into regular buyers
through successful website design and by addressing concerns about reliable performance. Thus,
the online retailing raises more issues than the benefits it currently offers.
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RECOMMENDATIONS:
The companies need to reduce the risks related to consumer incompetence by tactics such as
making purchase websites easier to navigate, and introducing Internet kiosks, computers and
other aids in stores. The goal is not to convert all shoppers to online purchasing, but to show
them it’s an option.
In addition to above, efforts need to be taken to educate the online buyers on the steps that need
to be undertaken while making an online purchase.
Moreover, the feedback of an online buyer should be captured to identify flaws in service
delivery. This can be done through online communities and blogs that serve as advertising and
marketing tools and a source of feedback for enterprises.
REFERENCES
Consumer online shopping attitudes and behavior: an assessment of research ,by: Na Li
and Ping Zhang ,Syracuse University
Consumer attitudes toward shopping venues affect marketing strategies .By Susan
McGinley
The State of E-Commerce: Online Shopping Trends,By James Maguire
Journal of Electronic Commerce Research, VOL. 6, NO.2, 2005
Research report by IMNAI & Pinstrom
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Research report By: Thijs L. J. Broekhuizen ,University of Groningen, The Netherlands
Framework for consumers’ intentions to shop online, research by Emerald
Research report By: IAMAI
55
ANNEXURE 1
Questionnaire
1. Have you ever made a purchase over the Internet? a. Yes b. No
2. When was the last time you made a purchase over the Internet?
a. One month ago b. Two months ago c. More than two months ago
3. In the past 3 months what items have you purchased on the Internet?
a. Books b. Videos / DVDs / Games
c. Airline Tickets / Reservations d. Clothing / Accessories / Shoes
e. Music f. Electronic Equipment
g. Computer Hardware h. Tours / Hotel Reservations
i. Event Tickets j. Computer software
k. Cosmetics / Nutrition Supplies l. Groceries
m. Sporting Goods n. other items
4. Which method (or methods) of payment did you use to make your last purchases over the
Internet in the past 3 months?
a. Credit /Debit Card b. Bank Transfer c. Cash on Delivery
d. Money Transfer e. Other Method
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5. What helps you decide which site to use for shopping online?
a. Search engine b. Personal recommendation c. Special offer I saw
d. Online Advertising e. Same store I buy from offline
f. TV/print or other advertising
6. Do you have enough information about online products and services?
Totally disagree Totally agree
7. Online shopping is useful:
Totally disagree Totally agree
8. Online shopping is easy to do:
Totally disagree Totally agree
9. Online shopping is enjoyable:
Totally disagree Totally agree
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10. Online shopping is secure:
Totally disagree Totally agree
11. Quality of internet connection is good:
Totally disagree Totally agree
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12. For each of the following, please tell if these concern you when you are making a
purchase over the Internet.
Great deal Fair amount A little Not at all
a) Not sure of product quality
b) Cannot bargain/Negotiate
c) Not sure of security of transactions
/Credit card misuse
d) Need to touch and feel the product
e) Significant discounts are not there
f) Have to wait for delivery
NAME:
AGE: below 23 yrs
23 yrs- 40 yrs
40 yrs-55yrs
55yrs and above
GENDER: Male/ Female
MONTHLY INCOME: below Rs. 20,000
Rs. 20,000-50,000
Rs. 50,000 and above
CONTACT NO:
EMAIL ID:
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ANNEXURE:2
Different models of consumer attitude towards online shopping
By:Mary Ann Eastlick
This chart shows how consumer attitude toward online shopping can lead either to approach
coping (wanting to shop online) or to avoidance coping (deciding not to search or shop online).
Someone who is optimistic toward the benefits of online shopping will develop approach coping.
A person who is pessimistic toward online shopping will think of the drawbacks to it and decide
to purchase in physical stores instead, which is avoidance coping.
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ANNEXURE:3
FRAMEWORK FOR CONSUMERS’ INTENTIONS TO SHOP ONLINE
Source: research by Emerald
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ANNEXURE:4
By: Thijs L. J. Broekhuizen
University of Groningen, The Netherlands
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ANNEXURE:5
Marketing Trends in India Online Travel Industry
Searches by Indians every month Over 1 billion
Searches by Indians that result in sponsored links shown,
every month
308 million
Total clicks on sponsored links by Indian users in a month Over 4.8 million
Number of advertisers targeting Indians web-users Over 40,000
Total annualized spend by all advertisers targeting Indian
users
Rs.236 crores (US $ 52 m)
Total annualized spend by Indian advertisers targeting Indian
users
Rs.72 crores (US $ 16 m)
Most amount spent by one advertiser Rs.9.7 crores (US $ 2.2 m)
All brands that spend more than Rs.10 lakhs a year in India 291
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Indian brands that spend more than Rs.10 lakhs a year in
India
90
Average number of key words bought by a brand 42
Most key words bought by a brand 89,377
Most clicks bought by a brand in a month 599,968
Average cost per click paid by advertiser in India Rs.16.20 ($ 0.36)
Highest cost per click paid by advertiser in India Rs.266 ($ 5.92)
Average search campaign click-through rate 0.62%
ANNEXURE:6
Top Online Travel Industry using Search Engine Marketing and their annual spend in
Rupees.
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Keywords Portfolio: Online Travel India Firms
Source: IMNAI & Pinstrom
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.
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