Dissertation Report-deepanshu.docx

DISSERTATION REPORT OF A STUDY ON CONSUMER PERCEPTION ON INTERNATIONAL ONLINE SHOPPING “Submitted in the Partial Fulfillment for the Requirement of Post Graduate Diploma in Management in International Business” (PGDM-IB)

Submitted To:

Submitted By:

Dr. Mukul Mishra

Deepanshu Chawla

Associate Professor

Roll No: 09/PGDM (IB) Batch: 2017-2019

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DISSERTATION REPORT ON A STUDY ON CONSUMER PERCEPTION ON INTERNATIONAL ONLINE SHOPPING “Submitted in the Partial Fulfillment for the Requirement of Post Graduate Diploma in Management in International Business” (PGDM-IB)

Submitted To:

Submitted By:

Dr. Mukul Mishra

Deepanshu Chawla

Associate Professor

Roll No. 09/PGDM (IB) Batch 2017-19

Jagannath International Management School Kalkaji, New Delhi 2

ACKNOWLEDGEMENT A project is never the work of an individual. It is moreover a combination of ideas, suggestions, review, contribution and work involving many folks. It cannot be completed without guidance I am thankful to my internal faculty guide of my institute DR. J.K BATRA (Director at JIMS Kalkaji) and my internal mentor Dr. MUKUL MISHRA (Associate Professor at JIMS Kalkaji) for guiding me with all the rules and regulations of internships and clearing the doubts whenever required. I choose this moment to acknowledge their help gratefully. It is my radiant sentiment to place on records my best regards and deepest sense of gratitude to the constant support I have received through my Family, Friends and Co-workers during the Internship period. I perceive as this opportunity a milestone in my career development. I will strive to use gained skills and knowledge in the best possible way, and I will continue to work on their improvement to attain desired career objectives. Hope to continue cooperation with all of you in the future.

Deepanshu Chawla 09/PGDM-2017(IB) 2017-2019

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EXECUTIVE SUMMARY The growing use of Internet in India provides a developing prospect for online shopping. E-marketers know the factors affecting online international 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=100). Factor analysis technique in SPSS was used to classify these factors which buyers keep in mind while shopping online.

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CONTENTS CHAPTER 1: INTRODUCTION............................................................................ 8 INTRODUCTION TO ONLINE SHOPPING .......................................................................... 8 HISTORY OF ONLINE SHOPPING .................................................................................. 9 RECENT DEVLOPEMENT IN ONLINE SHOPPING......................................................... 10 ONLINE SHOPPING IN INDIA ......................................................................................... 14 INDIAN E-COMMERCE ............................................................................................... 15 PROJECT PROFILE .......................................................................................................... 17 OBJECTIVE OF THE STUDY ......................................................................................... 17 SCOPE OF THE STUDY ................................................................................................ 17 RATIONALE OF STUDY................................................................................................ 17 THEORETICAL PERSPECTIVE ........................................................................... 19 CHAPTER 2: THEORETICAL PERSPECTIVE.................................................. 20 CHAPTER 3: RESEARCH METHODOLOGY.................................................... 24 RESEARCH OBJECTIVE.................................................................................................... 24 RESEARCH FRAMEWORK ............................................................................................... 24 PROPOSED MODEL .................................................................................................... 24 DATA COLLECTION METHOD ......................................................................................... 28 SECONDARY DATA ..................................................................................................... 28 SAMPLE DESIGN ............................................................................................................ 28 CHAPTER 4: DATA ANALYSIS AND FINDINGS ............................................. 31 DATA ANALYSIS ............................................................................................................. 31 FINDINGS ....................................................................................................................... 41 CHAPTER 5: CONCLUSION AND RECOMMENDATION ................................ 44 CONCLUSION ................................................................................................................. 44 BARRIERS TO THE GROWTH OF ONLINE MARKET ..................................................... 45 5

RECOMMENDATIONS .................................................................................................... 46 LIMITATIONS ................................................................................................................. 48 CHAPTER 6: BIBLIOGRAPHY.......................................................................... 50 REFERENCES .................................................................................................................. 50 WEBSITES ......................................................................................................... 50 ANNEXURE AND APPENDICIES ..................................................................... 51 QUESTIONNAIRE............................................................................................................ 53

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CHAPTER 1 INTRODUCTION

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CHAPTER 1: INTRODUCTION INTRODUCTION TO ONLINE SHOPPING 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 feedback 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 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.

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HISTORY OF ONLINE SHOPPING Online Shopping was invented by Michael Aldrich in the year 1979. In 1980, Redfin’s Office Transformation was propelled by him, which empowered the merchants, suppliers, consumers and operator to interface with the corporate framework over the web and portable exchanges electronically. In 1990, Tim Berners-Lee created the first World Wide Web server and browser in UK. 1 It opened for commercial use in 1991. In 1994 other advances took place, such as online banking and the opening of an online pizza shop by Pizza Hut. 1 During that same year, Netscape introduced SSL encryption of data transferred online, which has become essential for secure online shopping. Also, in 1994, the German company Intershop introduced its first online shopping system. In 1995, Amazon launched its online shopping site, and in 1996, eBay appeared. Originally, electronic commerce was identified as the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK. From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing. In 1990, Tim Berners-Lee invented the Worldwide Web browser and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. Commercial enterprise on the Internet was strictly prohibited by NSF until 1995.2 Although the Internet became popular worldwide around 1994 with the adoption of Mosaic web 4 browser, it took about five years to introduce security protocols and DSL allowing continual connection 9

to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services. RECENT DEVLOPEMENT IN ONLINE SHOPPING Online retail is continuing to grow during the recent years as the result of incredible breakouts of modern technology. The evolutions of mobile devices, social networks, ecommerce platforms, etc. bring both advantages and challenges to retailers, who need to prepare carefully to adapt with changes and take the leads in the competitions. When the 2018 is coming to end, let’s see which will change the game in the upcoming 2019 from the 22 predictions about the new online retail trends AR AND VR TAKE ADVANTAGES

AR is Augmented Reality and VR is Virtual Reality. AR and VR have already shown their potential in 2018 with many famous brand such as IKEA, Samsung, or Amazon. These technologies help customer to view and try products on their devices before making decisions to buy. AR and VR bring real customer experience especially for online retails who are selling home decors, furniture, 10

clothes, cosmetics, etc. Many brands are investing to develop AR and VR, now Amazon and Samsung are the two giants who are leading the development. VOICE TECHNOLOGY DRIVES MORE SALES

Have you ever heard about the term “voice commerce”, it refers to the transactions that occur when customers purchase products by voice? Huge development of voice technology allows people to search, select and purchase by talking with their devices and it is used by 41% customers of Amazon Echo and Google Home in the 2017. And there will be 50% of total searchers will use voice search in 2020. SAAS SOLUTIONS LEAD THE RETAIL TRENDS

SaaS stands for Software as a Service solutions, they are becoming the best choice for online retailer because most of ecommerce platforms are not very 11

flexible, the operations are pretty slow and business owners would find it hard to scale up their sale volume. SaaS solutions run separately on cloud and independent from the on-premise system MODERN DELIVERY IN RETAIL ECOSYSTEM

Another ecommerce predictions for 2019 online retail trends is the transformation in delivery services. Amazon starts to use drones to ship products in England, or with traditional shipping methods, companies have some new options to operate the services such as subscription-based delivery. Customer experience in delivery services would be improved remarkably with 2-hours shipping or in-day shipping, and cross-channel purchases are also served. EASY MOBILE CHECKOUT

The principles about Mobile-First are popular for many years, and there is a prediction for ecommerce in 2022, smartphones will account for 175.4 US dollar in 12

sales and they will keep leading the retail trends. Therefore, if retailers want to grow revenue, the most significant task is optimizing mobile experience, especially the checkout process. The average cart abandonment rate for all devices in 2017 is around 79%, and 28% of cart abandonment is because of complicated checkout. MORE INTERACTIVE CHATBOTS

In 2019, the modern chatbots with AI integrations will help to improve conversion rate significantly. They can talk to customer under different scenarios naturally by the pre-configurations to consult, qualify leads, and close deals, as well as to collect accurate insights for merchants to make right decisions. CUSTOMER SERVICE AUTOMATION

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42% of retail customers continue to buy more after receiving good customer services, and 52% of unsatisfied customer stop to return to the stores. Moreover, with more channels to sell products with complicated delivery systems, there will be huge pressure on customer services in 2019. That’s why technologies should be applied to replace manual customer support. Prediction for ecommerce in 2020 is there will be 85% of customer interactions conducted without human.

ONLINE SHOPPING IN INDIA The birth and growth of Internet has been the biggest event of the century. Ecommerce in India has come a long way from a timid beginning in the 1999-2000 to a period where one can sell and find all sorts of stuff from a high-end product to a meager peanut online. Most corporations are using Internet to represent their product range and services so that it is accessible to the global market and to reach out to a larger range of their audience. Computers and the Internet have completely changed the way one handles dayto-day transactions; online shopping is one of them. The Internet has brought about sweeping changes in the purchasing habits of the people. In the comfort of one's home, office or cyber cafe or anywhere across the globe, one can log on and buy just about anything from apparel, books, music and diamond jewelry to digital cameras, mobile phones, MP3 players, video games, movie tickets, rail and air tickets. Ease, simplicity, convenience and security are the key factors turning the users to buy online. India has an internet users base of about 450 million as of July 2017, 40% of the population. Despite being the second-largest userbase in world, only behind China (650 million, 48% of population), the penetration of e-commerce is low compared to markets like the United States (266 million, 84%), or France (54 M, 81%), but is growing at an unprecedented rate, adding around 6 million new entrants every month. In 2016, about 69 million consumers purchased online and the number is 14

expected to cross 100 million by 2017 with the rise of digital natives, better infrastructure in terms of logistics, broadband and Internet-ready devices to fuel the demand in e-Commerce. In 2017, mobile commerce will become more important as most of the companies are shifting to m-commerce. Mobile already accounts for 30-35% of e-commerce sales, and its share will jump to 45-50% by 2017," adds the report-commerce is big business and getting bigger every day. Online shopping has been embraced by Indians with close to 25-30 million adults making a purchase via the internet in the last year. The year 2017 will see or is seeing large scale growth in the Indian e-commerce sector with increased participation from people across the country. India's e-commerce market is estimated to be USD 33 billion in the financial year 2017 NASSCOM's latest estimates. This industry will continue to drive more employment opportunities and contribute towards creating more entrepreneurs through the e-commerce marketplace model, noted the study. INDIAN E-COMMERCE

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The spread of e-commerce has led to the rise of several niche players who largely specialize their products around a specific theme. As many as 1,06,086 websites are registered daily and more than 25% are for niche businesses. The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. The E-commerce market is expected to reach US$ 200 billion by 2027 from US$ 38.5 billion in 2017. India's e-commerce market has the potential to grow more than four folds to US$ 150 billion by 2022 supported by rising incomes and surge in internet users. Online shoppers in India are expected to reach 120 million in 2018 and eventually 220 million by 2025. Average online retail spending in India was US$ 224 per user in 2017. E-commerce industry in India witnessed 21 private equity and venture capital deals worth US$ 2.1 billion in 2017 and 40 deals worth US$ 1,129 million in the first half of 2018. E-commerce startups in India received US$ 786.87 million of funding in the first half of 2018. Online retail sales in India are expected to grow by 31 per cent to touch US$ 32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall. Online retail is expected to contribute 2.9 per cent of retail market in 2018. Much growth of the industry has been triggered by increasing internet and smartphone penetration. Internet penetration in India grew from just 4 per cent in 2007 to 34.42 per cent in 2017, registering a CAGR of 24 per cent between 2007 and 2017. As of September 2018, overall internet penetration in India was 42.87 per cent. The number of internet users in India is expected to increase from 560.01 million as of September 2018 to 829 million by 2021. Internet penetration in rural India is expected to grow as high as 45 per cent by 2021 compared to the current rate of 18 per cent. According to a report by Grant Thronton, as much as US$2.1 billion worth of mergers and acquisitions were inked in 2017 in the booming Indian e-commerce industry. Here is the list of Some latest Mergers & Acquisitions which happened in India over a period of time:

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PROJECT PROFILE OBJECTIVE OF THE STUDY The objective 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: 

To know the consumers awareness and perception about the products and services provided on internet.



To know how it provides products and services and satisfies their customers and reduces the uncertainty in purchase decision process.

SCOPE OF THE STUDY 

The Study was conducted among the Internet users.



The Geographical area covered was Sec-18 Noida, Sec-29 Noida, Cannaught place, Karol Baugh, Delhi.



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 17

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 consumer’s perception towards online shopping, benefits perceived by them and what factors attract them towards online shopping.

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CHAPTER 2 THEORETICAL PERSPECTIVE

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CHAPTER 2: THEORETICAL PERSPECTIVE 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 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 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. 20

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 web base 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 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 21

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 RESEARCH METHODOLOGY

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CHAPTER 3: RESEARCH METHODOLOGY RESEARCH OBJECTIVE To know and understand the consumer’s perception and awareness about internet marketing/ shopping. This will help to know the attitude and perception of consumers towards online shopping and what are the factors which shape the consumer’s perception towards online shopping. Also, what are key concerns from the point of view of consumer while online shopping. 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?

RESEARCH FRAMEWORK Eleven different factors were identified by studying the existing models of consumer attitudes (Refer Annexure 1, 2) that play an important role in online purchase, then a model was proposed leading to online shopping. The data was collected only through Questionnaires. The sample size was 100. And random sampling was done among the internet users. PROPOSED MODEL After examining the 10 empirical studies, we identify a total of 9 interrelated factors for which the empirical evidences show significant relationships. These ten factors are perceived usefulness, perceived ease of use, information on online shopping, 24

security and privacy, quality of internet connection, attitude towards online shopping, intention to shop online, online purchasing, and consumer satisfaction. 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. 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. 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 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

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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 AND PERCEPTION TOWARDS ONLINE SHOPPING Consumer’s attitude and perception 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: 

The consumer’s acceptance of the Internet as a shopping channel



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 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. 26

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. 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

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DATA COLLECTION METHOD PRIMARY DATA It is original primary data, for specific purpose of research project. For this project, I have to use following common research instrument or toolQuestionnaire: Questionnaire development is the critical part of primary data collection method. For this I will prepare a questionnaire in such a way that it will be able to collect all relevant information regarding the project. The questionnaire was designed using various scaling techniques. The questionnaire was used mainly to test the model proposed for consumer perception 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. SECONDARY DATA It will be collected to add the value to the primary data. This may be used to collect necessary data and records by different websites, magazines, annual reports, journals, reference books, and newspapers, etc.

SAMPLE DESIGN Sample Unit For studying consumer perception on online shopping, samples were selected from Delhi (East). Sample Media The respondents in the samples are reached through personal interviews.

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Sampling Methods Sampling methods fall under two broad categories: 

Non-Probability Sampling method



Probability Sampling method

Sample Size: 100 Research Place: NCR region Sample Design I have prepared this project as descriptive type, as the objective of the study

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CHAPTER 4 DATA ANALYSIS AND FINDINGS

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CHAPTER 4: DATA ANALYSIS AND FINDINGS DATA ANALYSIS The objectives of the research were studied with respect to a regular online shopper who shopped more than once because they would be the right respondent to give an insight about the online shopping. Therefore, it is firstly important to understand who is a regular online shopper. In the survey the respondents were asked the following questions which helped to know about a regular shopper HAVE PURCHASED ANYTHING ONLINE EVER?

NO 35%

YES 65%

The research showed that 65% of the Internet users had shopped online while 35% had not bought anything. This is mainly because of the changing lifestyle and taste patterns. As the life is getting more and more fast paced more people are moving on to shop online mainly because of convenience. This shows that a more Internet users are using it as a shopping medium and there is a huge potential in this sector but one should not be carried away by this figure. There could be a possibility that only a small section of the online shoppers is shopping or only a particular category of good had brought about this huge number. As a result, the 31

entire analysis was done in case of a regular online shopper to understand the shopping behavior of the online shoppers. FREQUENCY OF ONLINE PURCHASE

80%

74%

70% 60% 50% 40% 30% 20%

12% 5%

10%

9%

0% Only Once

2-4 times

5-6 times

More than 6 times

This helped to understand the purchasing behavior of the online shoppers. It was seen that 14% of the online shoppers had shopped more than five times and 74% had shopped 2-4 times. The frequency shows the acceptance of Internet as a shopping medium. Though only a small amount of the online shoppers had purchased more than 6 times but still there is a huge opportunity in the Internet arena. The 65% of the online shoppers who had shopped more than once were considered as regular shopper an entire analysis based on these regular shoppers.

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ONLINE SHOPPING & INTERNET USAGE BY YEARS 90%

78%

80% 70% 60% 50% 40% 30% 14%

20% 10%

2%

6%

0% Less than1year

1–3years

3–5years

More than 5years

The diagram shows that shopping has increased with the usage of Internet over the years. Regular shoppers who have been using Internet for more than one year had shopped to 98% and regular shoppers who have been using Internet for more than five years have shopped to 78%. Internet is not a new concept for these regular online shoppers and they have been using it for more than 5 years now. The increased usage over the years has led to an increase in shopping, as these regular shoppers are able to make use of the various e-commerce activities. ONLINE SHOPPING & INTERNET USAGE BY HOURS A WEEK 40%

36%

35% 28%

30% 25%

20%

20% 12%

15% 10% 5%

4%

0% 0-5 hours a week

6 - 10 hours a week

11 - 15 hours a week

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16 - 20 hours a week

More than 20 hours a week

The research shows that 36% of the online shopping had been done who use Internet for more than 20 hours a week and 96% of the shopping has been done by regular shoppers who have been using Internet for more than 5 hours a week. As more the regular online shopper is using the Internet it is seen that they end up buying more also. This shows that Internet is becoming an integral part of the daily activity of the regular online shopper. The regular online shoppers who have been using Internet for more than 20 hours are more comfortable and confident as a result they purchase more online. The study shows that the growing usage of Internet has led to increase in online shopping as seen above. THE WEB ONLINE ACTIVITY The following classifications are done to study the online activities in case of a regular online shopper ONLINE ACTIVITIES

10% 20%

32%

Shopping

Communication

Finance

24% 14% Inf ormation Entertainment Gathering

The Internet offers four basic services communication (socializing service with peer group or core group (email) or with new groups of people (chat), information 34

services, entertainment services and commerce services and shopping. The research shows 32% of the regular online shoppers use Internet for communication while only 10% uses it for shopping which shows that communication still forms the major activity among the regular online shoppers. ONLINE ACTIVITIES BY AGE This classification further provides an insight that Internet is mainly used as a means of communication in respect all the age groups of the regular online shoppers. It contributes to 60% of the major activity among the regular online shoppers who lie between the age group 18-30 years. It could be seen that shopping as a basic activity on the Internet contributes to the minimum. Internet as a medium of shopping is maximum used by regular online shoppers between the age group18-30 years, which is 18% while above 50 years it is used just to 2%. The increase in usage among the 18-30 years is basically due to high awareness. The marketers should focus mainly on the age group between 18-30, as they are the main drivers for growth

70%

18-30 years

60% 50%

31-40 years 40%

41-50 years

30% 20%

above 50 years

10% 0% communication

Information gathering

Finance

35

Shopping

ONLINE ACTIVITIES BY TIME

90% 80% 70% 60%

Com m unication

50%

Information

40%

Entertainm ent

30%

Finance

20%

Shopping

10% 0% 0-5 hours

6-10 hours

11-15 hours

16-20 hours

more than 20 hours

It is evident that regular online shoppers also spend a major part of their time in communication unlike the occasional online buyers. In 0-5 hours, a week they spend 77% of their time in communication, which includes email, and chat as the major activity with shopping which does not seem to exist at all. Information search constitute 20% of the time. The information search increases as the regular online shoppers tries to figure out ways to surf the Internet and access the information they require. It is true that more regular online shoppers use Internet shopping sites to gather information about products rather than to make a direct purchase. ONLINE SHOPPING AND GENDER Among the 65% of the online shopping, males (72%) had purchased more as compared to women (28%). This shows that it is true that more males are shopping online as compared to women. This is mainly because women still like to feel, see and touch the product before buying. It was noticed that some of them felt shopping as a reason to go out with the family and spend time together, which was not possible in case of online shopping. As more and more Indian women are flocking to Internet there is a possibility that they might end up in a purchase. 36

28% Female

72% Male

ONLINE SHOPPING & INCOME Income and buying behavior are positively related. It was seen that a regular online shopper with a higher income had purchased more online as compared to lower income online shopper. This trend was seen in all segment of the population. It is true that more the income in the hands of the population they would indulge in shopping. The service class had done the major purchase in all the various levels of income. It can be seen that hardly any purchase is done among the regular online shopper whose income lies below Rs5000.

38

40 35 30 25

less5000

21

5000-10000

20 15

10000-25000

15

14

above25000

11 8

10

5 5

1

3

2

5 1 1

1 1

3

0 Student

Service/Executive

Business

37

Others

ONLINE SHOPPING & EDUCATIONAL QUALIFICATION Educational difference is a significant demographic variable, which shows that regular shoppers who were better educated made more purchases online. 89% of the shopping has been done by the regular shopper whose is educated with a graduate or postgraduate degree. This shows that frequency of purchase is more in case of a higher educated regular shopper as compared to an online shopping done by a regular online shopper with matriculate (8%) and non-matriculate (3%).

3%

8%

Non

Matriculate

Matriculate

54%

35%

Postgraduate

Graduate

ONLINE SHOPPING & MOTIVATING FACTORS It is believed that consumers whether online shoppers or non-online shoppers value price to convenience but the study contrast this popular belief. The study showed that 32% of the shopping had been done by the regular shopper who think convenience is the main driving force while 23% of the shopping had been done for whom price was the main orientation for shopping online. Other motivating forces, which had led to online shopping, were saves time (26%), product availability and superior selection (12%), and product comparison (7%).

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7% Product

32%

Comparison

Convenience

26% Saves Time

12% Superior

23%

selection

Price

BARRIERS TO SHOPPING ONLINE

9%

7%

33%

Others

Privacy &

Unfamiliar

Security

14% Hassle of returning

16% 21%

Lack of

Inability to

Customer

touch & feel

Service

The main areas for concern in respect of the regular online shoppers while shopping were privacy and security (33%). Most of them still preferred the conventional method of shopping like the touch and the feel factor (21%). They felt that it is possible to see, feel, touch and try the products before buying in a shopping store as compared to Internet shopping. Other reasons that concern the

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regular online shoppers were inability to reach the customer service (16%), hassle of returning the product (14%). SATISFACTION INDEX

2% Highly Satisfied

12% Dissatisfied

31% Neither Satified nor Dissatisfied

55% Satisfied

A 55% of the regular online shoppers were satisfied with 12% dissatisfied. An important thing to be noted is that only 2% of the regular online shoppers were highly satisfied while 31% of the regular online shoppers were neither satisfied nor dissatisfied. This shows satisfaction level plays an important role in online shopping with more regular shoppers falling under the category of satisfied. This shows that they were overall satisfied by the experience of shopping online.

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FINDINGS

The findings show that Internet usage has increased over the years and it is leading to an increase in online shopping and also shows the consumers attitude and perception towards online shopping. Communication still forms the major activity among the large number of online shoppers as 32% of regular online shopper use Internet for communication as compared to shopping (10%). Online shopping is affected by demographics as it has been seen that more males are shopping online as compared women online shoppers and there is a positive relation between education and income levels with respect to the increased online shopping behavior. The most important motivating factor, which influenced the online shopping, was convenience followed by time saving and price. Regular online shoppers considered convenience as the main motivating factor while buying and were less price sensitive. But the online marketers should attempt to differentiate their products or services making the comparison easier. The marketers should bring out innovative ways so that the consumers can do more online shopping while taking the full advantage of rich information, easy access and convenience of the Internet. 41

One of the main concerns among the online shoppers was privacy and security. Another reason that hindered online shopping was the touch factor. Consumers still preferred the experience they get from traditional stores like feeling the store’s atmosphere, interacting with a salesperson, and seeking sensory stimulation. This might hinder the use of certain goods like grocery and apparel, as the touch factor is the main factor, which drives the shopping for these goods. The future of online shopping is bright especially in the categories of travel, books, electronic gadgets and gifts.

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CHAPTER 5 CONCLUSION AND RECOMMENDATION

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CHAPTER 5: CONCLUSION AND RECOMMENDATION CONCLUSION The e-commerce is one of the biggest things that have taken the business by a storm. It is creating an entire new economy, which has a huge potential and is fundamentally changing the way businesses are done. It is believed that electronic commerce will become a huge industry in the coming years and online shopping is now becoming a significant part of the consumers daily life to meet their neverending requirements in a convenient way. Online shopping is picking up and is becoming a trend. More consumers are indulging into Internet shopping as seen by the research because of the value proposition it offers to a customer such as convenience, 24x7 shopping, doorstop delivery, a broad product selection and the ever-expanding range of unique and unusual gift ideas as well as increased consumer confidence in shopping on the internet is increasing. The main motivating factor seen during the research was the convenience and customer service which drives the people to online shopping as a result today they are buying airline and railway tickets, books, home appliances, electronic gadgets, movie tickets, etc. by logging on to a web site, than driving up to a store .As the research suggest that increase in usage of internet increases the online shopping so there is a need to increase in broadband penetration as it accelerates the growth of online trade. A huge buyers and sellers across demographics are shopping online because of the changing lifestyles and shopping habits but the majority of the users are males. It was seen that despite the immense possibilities available on the Internet it is mainly used for mailing, chatting and surfing. E-mail applications still constitute the bulk of net traffic in the country. Increased Internet penetration, a hassle-free shopping environment and high levels of Net savviness see more and more Indians shopping online. 44

BARRIERS TO THE 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 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, Valentine’s Day, New Year, Christmas, Mother’s Day, Friendship Day etc. are. On these occasions younger generations prefers buying and sending gifts online. 45

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.

RECOMMENDATIONS Online shopping in India is poised for greater acceleration as PC and Internet penetration grows. It is becoming one of the top Internet activities and there is a huge growth in this business as more manufacturers and providers are integrating the Internet into their sales model. But there are many things that need to occur in online shopping to generate higher revenues and the key to it lies in the hands of the marketers. To make online shopping a boom following methods can be followed. 

India has a strong research and development (R&D) capability so companies should innovate rapidly to take care of the security issues. Technology like text to speech software’s should be innovated to take care of the security concern.



In India the total ownership of credit cards is small as compared to its population and there are also hesitant in using it as a mode of online payment therefore alternative methods of payment like cash on delivery 46

(COD) where the end user pays cash after the product is delivered and debit cards where the bank accounts are directly debited should be used. Other technologies like encryption technologies trusted third-party certifications; digital ID systems should be used. 

The consumers should be made aware that one of the safety aspects of using credit cards online is that in case of disputed credit card payments for online transactions the onus is on the merchants to prove that the transaction actually took place, as online users don't physically sign a credit slip.



There is a growth in the cellular phone market in India, more merchants should make use of this device allowing the customers to access the Internet and use it as mode of payment thereby obviating the need for PCs and credit cards.



It is not only important to pay strong attention to the security issue and create new, innovative safeguards that protect consumers but the merchants should promote these safeguards to the marketplace and make the prospective consumers aware that the communications, personal data, credit card accounts, and transaction information can be protected.



One of the factors that hinder Internet penetration in India is access. More companies should adopt click and mortar model with the real-world operations to complement its online presence for e.g. customers can walk to the office to access its services.



Merchants should provide goods and services that offer the right value for money. There should be transparency in policies (returns, privacy, shipping, etc.), insurance against fraud and a good after sales services should be provided to consumers making it an enjoyable experience.



Consumers today demand a better, more efficient and less cumbersome way to compare and buy products online. Innovative service should be provided to consumers so that they can compare products, which are available online using their mobile phones. 47

LIMITATIONS Every study will have its problems and limitations at some point during the project. This study is no different. The use of a non-probabilistic sample in the research was a major limitation because there was no way to make sure that the sample taken represented the total population of the Internet users. A non-probability sample lacks the accuracy and precision that a probability sample might offer. Though this samples provided a better insight about the online shoppers but there could be a possibility that a respondent may have done online shopping but is not a regular Internet user. It was seen that some respondents were biased towards some questions. Another major limitation encountered doing the research assignment was the issue regarding the time. Limitation of the study is the selection of the existing studies. Owing to time limitation, only a few numbers 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.

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CHAPTER 6 BIBLIOGRAPHY

49

CHAPTER 6: BIBLIOGRAPHY REFERENCES 

Prussakov Evgenii, Online shopping through consumer’s eyes, Am Navigator, 2008.



Price Lisa, The best of Online Shopping, Ballantine Books, 2001



Simpson Paul, Online Shopping: The rough Guide,3rd edition, 2000



Lillian Clark and Peter Wright, A review of Common Approaches to understanding Online Consumer Behavior, PP- 5.87- 5.122



Tonita Perea Monsuwe, Benedict G. C. Dellaut and KodeRuyter, What Drives Consumers to shop Online? A literature review, PP- 765-789.



Donthu, Naveen and Adriana Garcia (1999), The Internet Shopper, Journal of Advertising Research, V39 (3), 52-58.



Research report by: IAMAI



Emerald, Framework for consumers’ intentions to shop online, research report



Jarvenpaa Journal of Electronic Commerce Research, VOL. 6, and NO.2, 2005

WEBSITES 

http://en.wikipedia.org/wiki/online_shopping



www.iaciis.org/iis/2006_iis/PDFs/Changchit.pdf



http://www.ibimapublishing.com/journals/CIBIMA/2010/854516/854516.pdf

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ANNEXURE AND APPENDICIES 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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FRAMEWORK FOR CONSUMERS’ INTENTIONS TO SHOP ONLINE

By: Emerald

52

QUESTIONNAIRE KINDLY HIGHLIGHT/BOLD YOUR ANSWERS: 1.

Do you use Internet?  Yes

2.

3.

 No

How long have you been using Internet?  Less than 1 year

 3 – 5 years

 1 – 3 years

 More than 5 years

On the average, how much time (per week) do you spend in surfing the

Web?  0 – 5 hours

 16 – 20 hours

 6 – 10 hours

 More than 20 hours

 11 – 15 hours 4.

Have you purchased anything online ever?  Yes

5.

 No

Which category (ies) of goods have you bought through Internet?  Books

 Railway tickets

 Electronic Gadgets

 Airline tickets

 CD/Videos

 Computer Hardware 53

6.

 Accessories apparel

 Computer Software

 Gifts

 Magazines

 Event Tickets

 Movies tickets

 Hotel Rooms/Car Rental

 Office Supplies

 Jewelry

 Food / Groceries

 Infant / Child items

 Home tools and products

 Sporting goods

 Health and fitness products

 Toys

 Any other, specify………………

When did u shop for the first time?  Last 6 months  6 months- 1year  1-3 year  3-5 year  More than 5 year

7.

How frequently did you purchase online?  Only once  2-4 times  More than 5 times 54

 More than 6 times 8.

Overall, were you satisfied with your experience of online shopping?  Highly Satisfied  Satisfied  Neither satisfied nor dissatisfied  Dissatisfied  Highly Dissatisfied

9.

10.

Where do you most often access the Internet?  Home

 Cyber-cafes

 Office / College

 Any other, specify………

What are the activities that you use Internet for? (Kindly rank them between

1 to 5, with 1=most used, 2=used to a large extent, 3=used to a good extent, 4=used sometimes, 5=rarely used) Communication (E-mail, Instant Messaging, Bulletin Boards, News Groups, Chat, etc.) Information Gathering (Research, News, Sports scores, Search for employment, etc.) Entertainment (Games, Adult entertainment, Entertainment sites, Sports, Music, Web page design, etc.)

55

Finance (Investment portfolio, financial research, online banking, check stock/fund quotes, trading, etc.) Shopping (Researching purchases, purchasing, auctions, Selling, Classifieds, etc.) 11.

Which category (ies) of goods are you planning to buy through internet in

the near future?  Books

 Railway tickets

 Electronic Gadgets

 Airline tickets

 CD/Videos

 Computer Hardware

 Accessories apparel

 Computer Software

 Gifts

 Magazines

 Event Tickets

 Beauty products

 Movies tickets

 Health and fitness products

 Hotel Rooms/Car Rental

 Office Supplies

 Jewelry

 Food / Groceries

 Apparel gift certificates

 Pharmaceuticals

 Infant / Child items

 Home tools and products

 Sporting goods

 Home appliances

 Toys

 Any other, specify……………… 56

12.

What is your main motivation for buying through Internet?  Convenience (ease of purchase, home delivery, ability to shop 24x7)  Price  Saves time  Superior selection/Availability  Product comparison  Any other, specify………………

13.

What, according to you, are the most important barriers to purchase online?  I am worried about giving out my credit card number  I don’t have a credit card  I don’t like providing personal information  I don’t want to purchase from someone with whom I am not familiar  I enjoy going out to do my shopping  I like to see/touch the product in person, before I buy it  Internet is too slow / Pages take too long to load  I am worried about the cost/hassle of returning the product  Delivery costs are too high  Prices are too high 57

 Technical foul-ups prevent transactions from going through  I can’t find anything that I want to purchase on the Internet  I don’t know how but I am uncomfortable about purchasing through Internet  The process is expensive due to cost of access  Any other, specify…………… Personal Details 14.

Age:  Below 18 yrs.  18 - 30 yrs.  31 - 40 yrs.  41 – 50 yrs.  Above 50 yrs.

15.

Educational Background:  Non-Matriculate  Matriculate  Graduate  Postgraduate

16.

Occupation:  Business/Self Employed 58

 Service/Executive  Student  Any other, specify……………… 17.

Gender:  Male  Female

18.

Average Monthly Income:  Less than Rs. 5,000  Rs. 5,000 – Rs. 10,000  Rs. 10,000 – Rs. 25,000  Rs. 25,000 – Rs. 50,000  Above Rs. 50,000

Name: Contact No.: City:

59