1

A DISSERTATION REPORT

ON

“CONSUMER’S PERCEPTION ON ONLINE SHOPPING”

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ACKNOWLEDGEMENT

I would like to thank my batch incharge for extending

his helping hand towards this project and also assigning me the topic of “

Consumer Perception on Online Shopping” .

I would also like to express my gratitude to all the teaching faculty for giving

there valuable time for explaining all the topics clearly in a detailed manner.

Not to forget my friends and parents for their constant love and support.

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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=100). Factor analysis

technique in SPSS was used to classify these factors which buyers keep in mind while

shopping online.

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TABLE OF CONTENTS

ACKNOWLEDGEMENT

DECLARATION

ABSTRACT

1. INTRODUCTION 06-24

2. LITERATURE REVIEW 25-28

3. PROJECT PROFILE /OBJECTIVE 29-32

4. RESEARCH METHODOLOGY 33-41

5. DATA ANALYSIS 42-73

6. FINDINGS 74

7. GENERAL DISSCUSION 75-83

8. CONCLUSION 84-87

9. LIMITATION 88-91

10. RECOMMENDATION 92-97

11. EXECUTIVE SUMMARY 98-100

12. ANNEXURE 101-106

13. CONCLUSION 107-109

14. QUESTIONNAIRE 110-118

15. BIBILIOGRAPHY 119-120

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CHAPTER - 1

INTRODUCTION

1.0 INTRODUCTION

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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 have posited new emergent factors or assumptions that are based on the

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traditional models of consumer behavior, and then examine their validity in the Internet

context.

1.1 ONLINE SHOPPING IN INDIA

The birth and growth of Internet has been the biggest event of the century. E-commerce 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 day-to-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 jewellery 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.

E-commerce revenues in the country are projected to reach Rs 2,300 crore in the year 2006-

07, growing at 95 per cent over 2004-05(Source: Internet and Mobile Association of India,

IAMAI). This pertains to the business-to-consumer (B2C) segment. It may be too early to do

a comparison with the e-commerce scenes in countries such as the US where billions of

dollars are spent online but the business in India is growing exponentially every year, albeit

from a smaller base, the total revenues have reached a respectful size.

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1.1.0 Recent Developments

The number of users logging on to the Internet is growing by leaps and bounds. The number

of Indians who are online is expected to touch to 100 million by 2007-08, from the present

38.5 million according to the research conducted by IAMAI. The numbers indicate a growing

sense of comfort with the use of Internet for shopping. Accompanying this growth, there is an

increasing maturity in the way people use the Internet. It's a classical curve. Online users

typically start by using e-mail, gradually move on to browsing for news, information and

entertainment, and finally graduate to shopping and conducting business online. Online sales

have registered a huge jump and what was a concept five years ago is now beginning to hit

the mainstream levels. Roughly 10 percent of the world's population more than 627 million

people have shopped online at least once, in India it is just

sprouted and beginning to perish. Internet is now going beyond the simple exchange of

information to a shopping paradise. This medium is far bigger than expected, but many

retailers and marketers are not using it to its full potential.

Indian customers are increasingly getting comfortable with online shopping, and there is a

higher acceptability for the concept. India has 25 million Internet users and more is now

turning to online shopping. There has been an influx of online shopping sites in India with

many companies hitching onto the Internet bandwagon. The revenues from online shopping

are expected to more than double by 2006-07. According to IAMAI, the average number of

transactions per month in India has gone up from 2 lakh in 2003-04 to 4.4 lakh in 2004-05

and has doubled to 7.95 lakh transactions per month in the year 2005-06. The online sales

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during the festival season had increased rapidly especially during Diwali and Ramzan which

recorded a sales of Rs115 crore, a 117 per cent increase from the Rs53 crore in the year 2004-

05(source IAMAI). These figures clearly show that online shopping has truly come of age

and consumers are keen to shop on the net. Effective customer communication on products

plus reduced shipping costs and timely delivery has helped online marketers to seize a slice

of the Rs 115 crore sales.

Online shopping has become the latest trend among shoppers. Indians are becoming more

comfortable with e-commerce. The consumer’s attitude has been evolving towards online

purchases. It has become increasingly positive over the years. The attitudes that drive people

to shop online, such as

convenience, price comparison and choice are improving tremendously in India.

Though a miniscule amount in the global context, the Indian online shoppers’ population

would make its presence felt quite remarkably. The potential of the Indian e-market can be

gauged from the fact that 16 percent of Indian consumers want to buy online in the next six

months, making it the third most online-potential country after Korea (28 percent) and

Australia (26 percent) (Source:IMRB). This is an indication of a growing breed of Indian

consumers who are not only better equipped but also more confident of the online

transactions. Indian businesses have also grown mature enough to move up the IT curve and

they are considering Business to consumer (B2C) e-commerce a viable revenue model. Some

of the companies that have benefited are baazee.com, indiatimes.com, rediff.com,

indiamart.com, fabmart.com, traveljini.com and sifymall.com.

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Indiamart.com has witnessed a growth of more than ten times in just two years in its online

gifts domain. In the online travel domain, the company was able to generate an average

$8,000 worth of room bookings/month for its premium client. It is expected to touch $15-

20,000/month/client by the year-end, which is over 100 percent growth (Source:Indiamart).

Brick-and-mortar businesses are also building up e-commerce revenues. In the year 2005-06

Samsung India recorded a 120 percent jump in online buying from its site over the year 2004-

05 (Source: Samsung). Nirula’s witnessed more than double growth in its B2C e-commerce

revenues in the year 2005-06 and is positive for the next one to two years (Source: Nirula’s).

Companies like eBay India have seen a large increase in the number of sellers and buyers

from B and C cities and in a year the eBay community (buyers and sellers) base has increased

to 1.7 million users, which shows that more Indians are shopping online (Source: eBay).

Online sales are currently marked by a single digit growth, but the leading garment retailers

like Pantaloon, Shoppers’ Stop and Globus have already made business strategies to enter

into the world of e-retailing. Famous apparel brand Zodiac has already started online stores.

The main motive of these retailers through online sales is to reach the global markets and the

small towns where they do not have the outlets. Thus the India's Internet shopping sector is

preparing for a massive growth, which is fuelled by increasing broadband usage and growing

e-commerce.

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1.1.1 Online Activities

The Internet has entered the mainstream consciousness over the past decade. This has

happened primarily because the web has got a graphical interface and Internet has moved

from governmental control to private hands. The activities which are happening on the

Internet are email and instant messaging, general web surfing or browsing, reading news,

hobby searches, entertainment searches, shopping and buying online, medical information

searches, travel information searches, tracking credit cards, and playing games.

Communication i.e. email, chat or instant message is the basic activity for which Internet is

used. It is the single most important reason for people to go online. E-mail provides the

opportunity to communicate more often with a much broader circle of people than one can

reach by telephone or by mail in a convenient way. In India too email constitutes the major

activity on the Internet. It was found that more elderly people are increasingly using email as

compared to the younger generations.

In India the top five online activities are e-mail, surfing, chatting, search and job search.

Some of the sites, which are commonly used for these particular activities, are:

Yahoo -Most preferred communication portal, tops for email and chat

Indiatimes –Best event and sports news provider.

Naukri-Best recruitment portal

Google-Best information domain

Shaadi-Best for matrimonial services

eBay-Best online shopping portal

(Source:IAMAI)

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In India online trading, travel, recruitment, ticketing, real estate, classifieds and social

networking are a few spheres ripe for investment.

1.1.2 Employment

Today online job search market is expanding tremendously. According to IAMAI the number

of online job seekers had reached 6.5 million in 2005-06 and is expected to across 9.2 million

in the year 2006-07. The market size of the Indian online recruitment industry in 2005-06 was

145 crore and it is estimated to reach Rs 241 crore for 2006-07 (source IAMAI) this is mainly

because of the increase in the internet penetration which has lead to an increase in the users

for whom net has become a convenient way to meet their needs. Every year thousands of

graduates pass out and look for employment opportunities, for these job seekers Internet is

the most convenient (24 hour a day) and the comprehensive medium to research and look for

jobs. Internet is advantageous to both the job seekers (saves time and cost) and to the

recruiters (easy access to the best talent pool) as a result there is a win a win situation.

1.1.3 Banking & Trading

The net banking is increasing and it is estimated that 4.6 million Internet users are using

Internet for banking purposes and it is expected to grow to 16 million plus by 2007-08

(Source IAMAI). Trading stocks is also becoming a fast booming activity amongst the

Indians. The traders feel that trading through Internet is not that cheap but the convenience

provided by online trading is worth the costs involved. Traders can keep a regular check on

various stocks and it is easier to compare them. They can not only buy and sell stocks but can

also find the track record of various stocks, do technical analysis, can access live news from

international news agencies such as Reuters, CNBC and can find opinions from other leading

brokers which help them do decide whether to buy or sell. More and more traders today are

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making the immense use of these services, which shows that there is a huge potential in this

sector.

1.1.4 Matrimonial

As the popular adage goes, "Marriages are made in heaven" but today with so many

matrimonial portals in the market they help one find the best match for themselves. Some of

the popular marriage portals are shaadi.com, bharatmatrimony.com, Yahoo India matrimony,

MrnMrs.com, Matricorp.com and jeevansaathi.com.

These marriage portals have increased because there is a rise in the career orientation among

youngsters and increasing work pressures have resulted in less time for socializing. These

youngsters are becoming more independent and are now making their own decision in respect

of choosing their life partners. The marriage portals provide them the medium to interact with

the people who match their required profiles. These portals not only help in finding a better

match but also provide with services of astrologers, decorators, wedding planners and

caterers thus providing a whole lot of services in one basket. More Indians are registering to

these matrimonial portals and there seems to be a huge growth in the coming years.

1.1.5 Online Ticketing

The growth in the online travel business today is phenomenal. The Indian online travel

business is worth $350-400 million and is growing at 40-50 per cent year by year, as the

online population of the country is estimated to be 25 millions (Source:IMRB). There has

been a significant increase in online ticket booking in India with a double-digit growth, which

has also lead to an increase in Indian tourism. This growth in the travel industry has definitely

leaded to the increase in the travel portals. The scope for growth is immense in this sector as

more Indians are using the Internet.

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Travel sites like MakeMyTrip.com (MMT) has been growing at about 20 per cent month-on-

month, for the last four months, selling 1,400 tickets a day on an average (Source:

MakeMyTrip.com). The online bookings in India was mainly stared because of the low cost

carriers like Air Deccan which sells most of it tickets online. The revenue of the Indian

Railway Catering and Tourism Corporation (IRCTC) has also increased phenomenally

because of the online ticketing. The advantages of online ticketing are both for providers and

for consumers as the providers benefit from infrastructure cost while for users it is a

convenient way to book tickets.

Thus Internet has become an indispensable part of life and has reduced the world to a global

village. Many corporates are getting into this bandwagon, as there seem to be a humongous

growth in the coming years. Airline, cinema, hotel bookings, etc are all increasingly going

online. The future of online business is bright therefore companies are providing more

convenient services to the consumers and thereby changing their mindsets and attitudes

towards life.

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.

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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.

1.1.6 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.

1.1.7 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.

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In line 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%), etc.

Payments

Online shoppers commonly use a credit card to make payments, however some systems

enable users to create accounts and pay by alternative means, such as:

Billing to mobile phones and landlines

Cash on delivery (C.O.D., offered by very few online stores)

Cheque / Check

Debit card

Direct debit in some countries

Electronic money of various types

Gift cards

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Postal money order

Wire transfer /delivery on payment

Some sites will not accept international credit cards, some require both the purchaser's billing

address and shipping address to be in the same country in which site does its business, and

still other sites allow customers from anywhere to send gifts anywhere. The financial part of a

transaction might be processed in real time (for example, letting the consumer know their

credit card was declined before they log off), or might be done later as part of the fulfillment

process.

ADVANTAGES

Convenience

Online stores are usually available 24 hours a day, and many consumers have Internet access

both at work and at home. Other establishments such as internet cafes and schools provide

access as well. A visit to a conventional retail store requires travel and must take place during

business hours.

In the event of a problem with the item it is not what the consumer ordered, or it is not what

they expected—consumers are concerned with the ease with which they can return an item

for the correct one or for a refund. Consumers may need to contact the retailer, visit the post

office and pay return shipping, and then wait for a replacement or refund. Some online

companies have more generous return policies to compensate for the traditional advantage of

physical stores. For example, the online shoe retailer Zappos.com includes labels for free

return shipping, and does not charge a restocking fee, even for returns which are not the result

of merchant error. (Note: In the United Kingdom, online shops are prohibited from charging a

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restocking fee if the consumer cancels their order in accordance with the Consumer

Protection (Distance Selling) Act 2000).

Information and reviews

Online stores must describe products for sale with text, photos, and multimedia files, whereas

in a physical retail store, the actual product and the manufacturer's packaging will be

available for direct inspection (which might involve a test drive, fitting, or other

experimentation).

Some online stores provide or link to supplemental product information, such as instructions,

safety procedures, demonstrations, or manufacturer specifications. Some provide background

information, advice, or how-to guides designed to help consumers decide which product to

buy.

Some stores even allow customers to comment or rate their items. There are also dedicated

review sites that host user reviews for different products. Reviews and now blogs gives

customers the option of shopping cheaper org anise purchases from all over the world without

having to depend on local retailers.

In a conventional retail store, clerks are generally available to answer questions. Some online

stores have real-time chat features, but most rely on e-mail or phone calls to handle customer

questions.

Price and selection

One advantage of shopping online is being able to quickly seek out deals for items or services

with many different vendors (though some local search engines do exist to help consumers

locate products for sale in nearby stores). Search engines, online price comparison services

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and discovery shopping engines can be used to look up sellers of a particular product or

service.

Shipping costs (if applicable) reduce the price advantage of online merchandise, though

depending on the jurisdiction, a lack of sales tax may compensate for this.

Shipping a small number of items, especially from another country, is much more expensive

than making the larger shipments bricks-and-mortar retailers order. Some retailers (especially

those selling small, high-value items like electronics) offer free shipping on sufficiently large

orders.

Another major advantage for retailers is the ability to rapidly switch suppliers and vendors

without disrupting users' shopping experience..

DISADVANTAGES

Fraud and security concerns

Given the lack of ability to inspect merchandise before purchase, consumers are at higher risk

of fraud on the part of the merchant than in a physical store. Merchants also risk fraudulent

purchases using stolen credit cards or fraudulent repudiation of the online purchase. With a

warehouse instead of a retail storefront, merchants face less risk from physical theft.

Secure Sockets Layer (SSL) encryption has generally solved the problem of credit card

numbers being intercepted in transit between the consumer and the merchant. Identity theft is

still a concern for consumers when hackers break into a merchant's web site and steal names,

addresses and credit card numbers. A number of high-profile break-ins in the 2000s has

prompted some U.S. states to require disclosure to consumers when this happens. Computer

security has thus become a major concern for merchants and e-commerce service providers,

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who deploy countermeasures such as firewalls and anti-virus software to protect their

networks.

Phishing is another danger, where consumers are fooled into thinking they are dealing with a

reputable retailer, when they have actually been manipulated into feeding private information

to a system operated by a malicious party. Denial of service attacks are a minor risk for

merchants, as are server and network outages.

Quality seals can be placed on the Shop web page if it has undergone an independent

assessment and meets all requirements of the company issuing the seal. The purpose of these

seals is to increase the confidence of the online shoppers; the existence of many different

seals, or seals unfamiliar to consumers, may foil this effort to a certain extent. A number of

resources offer advice on how consumers can protect themselves when using online retailer

services. These include:

Sticking with known stores, or attempting to find independent consumer reviews of

their experiences; also ensuring that there is comprehensive contact information on

the website before using the service, and noting if the retailer has enrolled in

industry oversight programs such as trust mark or trust seal.

Before buying from a new company, evaluate the website by considering issues such

as: the professionalism and user-friendliness of the site; whether or not the company

lists a telephone number and/or street address along with e-contact information;

whether a fair and reasonable refund and return policy is clearly stated; and whether

there are hidden price inflators, such as excessive shipping and handling charges.

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Ensuring that the retailer has an acceptable privacy policy posted. For example note

if the retailer does not explicitly state that it will not share private information with

others without consent.

Ensuring that the vendor address is protected with SSL (see above) when entering

credit card information. If it does the address on the credit card information entry

screen will start with "HTTPS".

Using strong passwords, without personal information. Another option is a "pass

phrase," which might be something along the lines: "I shop 4 good a buy!!" These are

difficult to hack, and provides a variety of upper, lower, and special characters and

could be site specific and easy to remember.

Although the benefits of online shopping are considerable, when the process goes poorly it

can create a thorny situation. A few problems that shoppers potentially face include identity

theft, faulty products, and the accumulation of spyware. Whenever you purchase a product,

you are going to be required to put in your credit card information and billing/shipping

address. If the website is not secure a customers information can be accessible to anyone who

knows how to obtain it. Most large online corporations are inventing new ways to make fraud

more difficult, however, the criminals are constantly responding to these developments with

new ways to manipulate the system. Even though these efforts are making it easier to protect

yourself online, it is a constant fight to maintain the lead. It is advisable to be aware of the

most current technology and scams out there to fully protect yourself and your finances.One

of the hardest areas to deal with in online shopping is the delivery of the products. Most

companies offer shipping insurance in case the product is lost or damaged; however, if the

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buyer opts not to purchase insurance on their products, they are generally out of luck. Some

shipping companies will offer refunds or compensation for the damage, but it is up to their

discretion if this will happen. It is important to realize that once the product leaves the hands

of the seller, they have no responsibility (provided the product is what the buyer ordered and

is in the specified condition).

Lack of full cost disclosure

The lack of full disclosure with regards to the total cost of purchase is one of the concerns of

online shopping. While it may be easy to compare the base price of an item online, it may not

be easy to see the total cost up front as additional fees such as shipping are often not be

visible until the final step in the checkout process. The problem is especially evident with

cross-border purchases, where the cost indicated at the final checkout screen may not include

additional fees that must be paid upon delivery such as duties and brokerage. Some services

such as the Canadian based Wishabi attempts to include estimates of these additional cost,[but

nevertheless, the lack of general full cost disclosure remains a concern.

Privacy

Privacy of personal information is a significant issue for some consumers. Different legal

jurisdictions have different laws concerning consumer privacy, and different levels of

enforcement. Many consumers wish to avoid spam and telemarketing which could result

from supplying contact information to an online merchant. In response, many merchants

promise not to use consumer information for these purposes, or provide a mechanism to opt-

out of such contacts.

Many websites keep track of consumers shopping habits in order to suggest items and other

websites to view. Brick-and-mortar stores also collect consumer information. Some ask for

address and phone number at checkout, though consumers may refuse to provide it. Many

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larger stores use the address information encoded on consumers' credit cards (often without

their knowledge) to add them to a catalog mailing list. This information is obviously not

accessible to the merchant when paying in cash.

Hands-on inspection

Typically, only simple pictures and or descriptions of the item are all a customer can rely on

when shopping on online stores. If the customer does not have prior exposure to the item's

handling qualities, they will not have a full understanding of the item they are buying.

However, Written and Video Reviews are readily available from consumers who have

purchased similar items in the past. These can be helpful for prospective customers, but these

reviews can be sometimes subjective and based on personal preferences that may not reflect

end-user satisfaction once the item has been received.

Because of this, many consumers have begun going to real-world stores to view a product,

before purchasing online. To combat the process, Target has requested distributors give them

equally low prices, or alternatively, exclusive products available at their store only

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CHAPTER - 2

LITERATURE REVIEW

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2.0 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 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

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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 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,

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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.

28

CHAPTER - 3

PROJECT PROFILE/

OBJECTIVES

29

3.0 PROJECT PROFILE

3.1 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:

1. To know the consumers awareness and perception about the products and services

provided on internet.

2. To know how it provides products and services and satisfies their customers.

3. To know how it reduc\es the uncertainty in purchase decision process.

3.2 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,

3. The Study was based on a Schedule of Questions.

4. The scope of internet shopping

It was a time of past to spared your business in market by conventional methods. Old

market is today converted in high tech markets. Today if you want to purchase any

item from abroad you need not to go or you need not to call them for a sample. You

can find their products and see the catalogue on internet. Internet enables you to shop

throughout world from the comfort of your home. Internet has some special

characteristics which no other medium have. Only internet can provide you such

special information even no salesman can help you as internet helps. Countless people

can see products at a single movement, as well as they can purchase the product same

30

time. You can compare various product and choose which is more useful for you, You

have the facility to visit websites as much as you like no restriction on you here you

will find approximately all world class brands and their products you have the facility

to compare them, arrange according to many types like by price, by size, by category,

by most salable item and many more. This facility enables you to choose. This way of

shopping provides a new way of shopping. You get to identify the products, compare

the prices and quality and view the products from different angles. Testimonials and

reviews are the unique feature of shopping where you can share your experiences with

other users/consumers. The most exciting aspect of internet shopping is that it is a

24x7 affair! And youre free to shop on your leisure hours and even holiday are useful

for shopping for you. Your time is best valued here. You need not to go market so no

tension of conveyance, pollution, traffic etc.

The other dimension is that you directly purchase the items from original merchant in

online shopping no mediator comes between you and merchant so it becomes cheaper

to purchase item. Fewer mediators less price. Merchant will also save his money by

selling of goods on internet. merchant need not to spent for staff, showroom, other

shop expenses. He can sale by less resources and less expenses, some online store do

not have their physical showroom they display their product and services online and

deliver goods on customer 's door such merchant save a lot of expenses and they work

in less capital thats why they are able to sale goods on low prices.

Internet has a very bright future. If you want to increase your business and cross the

boundaries of region you need to take help of internet. Without going online you cant

think about your progress worldwide. In this regard you can see all large scale

business. Big brand, big shopping store are online. Online shopping is the demand of

todays modern time. Time and quality is the main subject of online shopping. Today

31

everybody is running to save time and who saves time automatically save money. Day

to day needed item is now available on internet and people prefer to shop online. Not

only for progress but also to survive in this competition era business internet help.

Are you looking for the fastest website for online shopping at low price branded

products than http://www.shoppingsnooper.com/ is the one name in one of the fastest

and largest shopping search engine. Here you can search every type of products at

competitive prices. Visit http://www.shoppingsnooper.com/ to see the unbeatable

speed of searching.

3.4 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 consumer’s perception towards online shopping, benefits

perceived by them and what factors attract them towards online shopping.

32

CHAPTER - 4

RESEARCH METHODOLOGY

33

4.0 RESEARCH METHODOLOGY

4.1 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.

4.2 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?

4.3 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.

34

4.3.1 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.

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.

35

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

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.

36

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:-

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

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

37

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

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.

38

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).

4.4 Data Collection Method-

4.4.1 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 tool-

Questionnaire-

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

39

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.

4.4.2 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.

4.5 Sample Design

4.5.1 Sample Unit

For studying consumer perception on online shopping, samples were selected from noida ncr.

4.5.2 Sample Media

The respondents in the samples are reached through personal interviews.

4.5.3 Sampling Methods

Sampling methods fall under two broad categories-

40

a) Non-probability sampling methods.

b) Probability sampling methods.

4.5.4 Sample size- 100

4.5.5 Research place- NCR region

4.5.6 Sample Design

I have prepared this project as descriptive type, as the objective of the study.

41

CHAPTER - 5

DATA ANALYSIS

42

5.0 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 where asked the following questions which helped to

know about a regular shopper.

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

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.

43

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

Communalities

Initial Extraction

Information1.000 .572

Percieved

usefulness 1.000 .675

Ease of use1.000 .763

Percieved

enjoyment1.000 .812

Security1.000 .260

44

Quality of internet

connection1.000 .673

Extraction Method: Principal Component Analysis.

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.

45

46

Component Matrix (a)

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.

47

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.

48

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)

Ease of use(Extracted from component 1)

Perceived enjoyment(Extracted from component 1)

49

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

50

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.

51

RESULTS OF FACTOR ANALYSIS

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.

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

52

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.

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 4 iterations.

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.

53

54

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

55

I Have you purchased anything online ever?

Fig. 1 Total Purchase Online

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

figures. There could be a possibility that only a small section of the online shoppers are

shopping or only a particular category of good had brought about this huge number. As a

result the entire analysis was done in case of a regular online shopper to understand the

shopping behavior of the online shoppers.

The following question helped to understand who is a regular online shopper among the 65%

who had indulged into online shopping.

NO35%

YES 65%

56

II How frequently did you purchase online?

Fig. 2 Frequency of Online Purchase

12%

74%

5%9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Only Once 2-4 times 5-6 times More than 6times

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 and the entire analysis was based on these

regular shoppers.

57

5.1 The Internet Usage

It is necessary to study the amount of time spend by the regular shoppers on the world wide

web because this would give us clear picture as to understand whether usage and time spent

by the regular online shoppers has an effect on online shopping or not.

Fig. 3 Online Shopping & Internet usage by years

2%6%

14%

78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Lessthan1year

1–3years 3–5years More than5years

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 lead to an increase in

shopping, as these regular shoppers are able to make use of the various e-commerce

activities.

58

Fig. 4 Online Shopping & Internet usage by hours a week

4%

12%

20%

28%

36%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 - 5hours a

week

6 - 10hours a

week

11 - 15hours a

week

16 - 20hours a

week

Morethan 20hours aweek

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 are

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 as compared to who use Internet for less

number of hours. The study shows that the growing usage of Internet has lead to increase in

online shopping as seen above. There is a positive relation between increase usage of Internet

and online purchase. The marketers should capture this enormous growth, which can be

brought by the penetration of broadband and lowering the prices of computers. Thus increase

in usage of Internet over the years and the more time spent has lead to an increase in

shopping. But one needs to know whether online shopping is an integral part of regular

shoppers or not this understood as follows.

59

5.2 The web online activity

The following classifications are done to study the online activities in case of a regular online

shopper.

Fig. 5 Online Activities

10%

Shopping20%

Finance

14%

Entertainment

24%

Inf ormation

Gathering

32%

Communication

The Internet offers four basic services communication (socializing service with peer group or

core group (email) or with new groups of people (chat), information 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.

60

Fig. 6 Online Activities by Age

0%

10%

20%

30%

40%

50%

60%

70%

communication Informationgathering

Finance Shopping

18-30 years

31-40 years

41-50 years

above 50years

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. Thus the research shows that though the regular shoppers are using the Internet

for quiet some time now but shopping still remains a small part of the major activity

61

Fig. 7 Online Activities by Time

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0-5 hours 6-10 hours 11-15hours

16-20hours

more than20 hours

Communication

Information

Entertainment

Finance

Shopping

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.

But it is to be noticed that as the time spend increases communication falls and other activity

picks up like entertainment and finance. One could see from the graph that between 16-20

hours a week communication falls further but information search also falls as the regular

online shoppers becomes more focused in their information search rather than wandering

aimlessly in the Internet space. They continuously use search engines for routine information

needs. The time spent on entertainment increases marginally to 18%. As the people spend

more time it has been seen that activities like shopping and finance related needs increases.

62

The regular online shoppers who use the Internet for more than 20 hours a week has shown

that they have indulged into more shopping i.e.10%. It is true that as the regular online

shoppers spends more time on the Internet there is a possibility that they would end up

buying more as they are ease with the use of internet. Increased usage of Internet is positively

related to the buying behavior on the Internet.

Analysis-

It is true that increase in internet has lead to an increase in the online shopping as 78% of the

online shopping has been done by the regular online shopper who have been using internet

for more than five years and 36% of the online shopping have been done among the regular

shopper who uses the Internet for more than 20 hours a week. Thus increase in usage of

Internet has lead to an increase in online shopping. But shopping still constitute a small

amount of the major activity on the internet as 32% of the regular online shoppers uses

Internet for communication while only 10% uses it for shopping. Communication still

constitutes the major activity on the Internet.

5.3 Demographic Factors

Online behavior is affected by demographics i.e. by gender, education and income.

5.3.1 Hypotesis

1. More male Internet users are frequent online buyers than female Internet users.

2. Regular online buyers are better educated than occasional online buyers.

3. Income is higher in case of a regular online shopper than occasional online buyer.

63

Fig. 8 Online Shopping & Gender

28%Female

72%Male

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. Also an increase in the spending power in the hands of the women might lead to an

increase in the online shopping. The research showed that 28% of the women who shopped

online fall mostly in the service and executive class with an income above Rs10,000. The

marketers should make sure that they produce the item keeping in mind the needs of the

women population as they still continue to be an important decision maker when shopping for

the family.

64

Fig. 9 Online Shopping & Educational Qualification

3%

Non

Matriculate

8%

Matriculate

54%

Postgraduate

35%

Graduate

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 a online shopping done by a regular online shopper with matriculate (8%) and

non matriculate (3%).

65

Fig. 10 Online Shopping & Income

1 2 1 13

5

1 1

8

21

53

14

38

15

11

0

5

10

15

20

25

30

35

40

Student Service/Executive Business Others

less5000

5000-10000

10000-25000

above25000

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.

Analysis-

Thus three hypotheses stated were true in case of the regular online shopper and it can

interpreted that online shopping is effected by demographics like gender, education and

income levels. Among the 65% of the online shopping, males (72%)had purchased as

compared to women (28%). There is a positive relation between education and income of the

online shoppers. 89% of the online shopping was done among the regular shoppers who were

educated with a graduate or postgraduate degree compared to 11% shopping who were

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matriculate and non-matriculate. A 60% of the shopping was done by the regular shopper

who had income more than Rs 25,000 than 40% who had income less than Rs.25,000.

5.4 Motivating & Satisfaction Factors

To identify the factors which Internet users choose to buy or not buy online and how

frequently they make such purchases. Analyzing the importance of satisfaction level in the

online purchasing environment.

5.4.1 Hypothesis

Consumers who make frequent online purchases are higher in convenience orientation than

those who purchase occasionally.

Fig. 11 Online Shopping & Motivating Factors

32%

Convenience

23%

Price

12%

Superior

selection

26%

Saves Time

7%

Product

Comparison

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 lead to online shopping, were saves time

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(26%), product availability and superior selection (12%), and product comparison (7%).

Convenience here is characterized as ease of purchase, home delivery and ability to shop

24x7. These factors motivate the regular online shopper to buy over the Internet and regular

online shoppers who value convenience are more likely to buy on the web, as compared to

occasional online shoppers. Every connection is a potential for net shopping. Therefore the

companies should attract and retain its regular online shoppers, as the Internet is a tangled

jungle of web sites, which is possible at a click of a mouse. They should design strategies and

develop products keeping in mind the convenience factors.

Fig. 12 Barriers to Shopping Online

7%

Others9%

Unfamiliar

14%

Hassle of

returning

16%

Lack of

Customer

Service

21%

Inability to

touch & feel

33%

Privacy &

Security

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 regular online shoppers were inability to reach the customer service

(16%), hassle of returning the product (14%), technical foul –ups, hesitant in purchasing from

an unfamiliar source and person and delivery costs. The marketers should formulate such

strategies so that the privacy and security concern can be taken care off.

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Fig. 13 Convenience- The Motivating Factor

12%

74%

5%9%

5%

20%

27%

48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Only once 2-4 times More than5 times

More than6 times

purchase

convenience

It has been seen that there is a positive correlation between the frequency of purchase and the

convenience factor for buying in the Internet arena. The regular online shopper who had

purchased more than 6 times (9%) for them convenience is the most important motivating

factor (48%)for shopping on the Internet. Convenience has been characterized as ease of

purchase, home delivery and ability to shop 24x7. The online shopper believes that large

amount of information about the product and the ability to compare prices is available at a

click of a mouse thus making the entire shopping experience very convenient. Thus the

marketers to should keep the convenience factor in mind while providing the goods and

services.

5.4.2 Satisfaction Index

69

It is important to understand the satisfaction level among the regular online shoppers, which

had lead to online shopping. This could be understood by the satisfaction index and the

frequency of purchase among the shoppers.

Fig. 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. But the companies should take measures so that the

dissatisfied and the neither satisfied nor dissatisfied category of regular online shoppers could

be moved to satisfied or highly satisfied. A note should be taken that only 2% of the regular

online shoppers are highly satisfied which shows that there are still concerns, which poise the

regular shoppers from using the Internet frequently as a shopping medium.

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Satisfaction level can also be measured by the frequency with which the online shoppers

purchase online. According to human psychology it is true that frequency of purchase

depends upon the satisfaction level received. According to the figure 2 (already explained), a

74% of the regular online shopper has purchased 2-4 times and 9% had purchased more than

6 times indicating that an increase in the confidence level and accepting the Internet as a

shopping medium. The increase in the frequency of shopping was mainly because they were

overall satisfied by the entire shopping experience.

Analysis-

It is seen that the main orientation for buying among the regular online shoppers were

convenience (32%), saves time (26%), price (23%), product availability and superior

selection (12%), and product comparison (7%). The hypothesis stated that convenience is

major factor motivating the regular shopper was true as 75% of the regular online shoppers

who have shopped more than 5 times felt it was necessary as compared to 25% who shopped

less than 5 times.

The barriers to online shopping as stated by the regular online shopper were privacy and

security (33%), inability to touch and feel the product (21%), customer service problems

(16%), hassle of returning the product (14%), purchasing from unfamiliar source and person

(9%) and other problems (7%).

Satisfaction level plays an important role in online shopping, as 55% of the regular online

shoppers that are satisfied tend to purchase more. It can also be seen that 74% have shopped

more 2-4 times and 11% had shopped more than 5 times showing that satisfaction level plays

an important role in online shopping.

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5.5 Future and growth of Online Shopping

This can be understood by the categories of good bought by the regular online shoppers

presently and the future of the various categories.

Fig. 15 Present & future categories of Goods

0%

20%

40%

60%

80%

100%

120%

Books Railwaytickets

Airlinetickets

ElectronicGadgets

Gifts Moviestickets

Present Future

It is seen that railway tickets 70% and airline tickets 93% are the most popular categories

among the online shoppers followed by books and electronic gadgets. This is the main

category, which is bringing about online shopping culture among the regular online shoppers.

The companies should bring out innovative ways so that there is a growth in other categories

of goods also. The entire shopping culture among the regular shoppers is brought mainly by

the travel categories followed by electronic gadgets. The graph shows that online shopping is

tend to grow in the coming years as consumers want to buy more in the future.

Table 1 Future Categories of Goods

Railway tickets 83%

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Airline tickets 80%

Electronic Gadgets 50%

Books 43%

Gifts 33%

Movies tickets 30%

Jewellery 23%

Computer Software 20%

Hotel Rooms/Car Rental 20%

Event Tickets 13%

Toys 13%

Infant / Child items 10%

Food / Groceries 7%

Accessories apparel 3%

CD/Videos 3%

Magazines 3%

Home tools and products 3%

Sporting goods 3%

The table I shows that shows that there is a future growth in the electronic gadget and book

categories also apart from railway and airline tickets, which continues to be on the priority

list. There is a growth in these categories because traditionally products like audio-video,

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apparel, and computer accessories were purchased through catalogs and other forms of direct

mail but toady online shopping serves a convenient means of distribution channel. Another

reason for the growth in these categories is because of well-established sites for travel, audio-

video (e.g., CD-Now), and computers (e.g.www.dell.com, www.sonyvaio.com), which lure

the consumers to buy these products. These goods do well because consumers are not

bothered much about the touch and feel factors, which generally drive the shopping in India

unlike categories like apparels and groceries where it still remain an important factor while

purchasing. It is difficult to change the set mindset of consumers for certain categories of

goods but still companies should keep innovating and find means and ways to attract more

online shopping.

Analysis-

There is a future growth in online shopping which can be especially seen in the travel arena

with railway 83% and airlines 80%, electronic gadgets (50%)and books (43%). Gifts also

seem to show a growth in the coming years. Thus the marketers should mainly focus on these

growing categories of goods, which would drive the online shopping in the future.

74

CHAPTER - 6

FINDINGS

75

6.0 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 behaviour.

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.

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.

76

CHAPTER - 7

GENERAL DISSCUSIONS

77

7.0 GENERAL DISCUSSION

7.1 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.

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.

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"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.

7.2 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 card 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."

7.3 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.

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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.

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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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%

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

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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 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

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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.

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.

4. 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.

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

84

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

85

CHAPTER - 8

CONCLUSION

86

8.0 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 never ending 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.

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Increased Internet penetration, a hassle free shopping environment and high levels of Net

savviness see more and more Indians shopping online.

8.1 Barriers to the Growth of Online Market

8.1.1 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.

8.1.2 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.

8.1.3 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.

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8.1.4 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.

8.1.5 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.

8.1.6 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.

89

CHAPTER - 9

LIMITATION

90

9.0 LIMITATION

Every study will have its problems and limitations at some point during the project. This

study is no different. The use of a non-probalistic 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 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.

91

LIMITATIONS, PERILS AND DANGERS OF ONLINE SHOPPING

 Scams and internet fraud is no more news in the internet world. Scammers have gone deep

online. Millions of dollars are reported every day of the year to be lost by innocent souls.

Men and women are duped online every day without any form of comfort in their lives. Since

the internet is for all and sundry, excessive exposure to it could be dangerous and risky. The

problem with online shopping ranges from A to Z. They are avoidable if they are known. It

should be clear that not everybody online is there to buy or sell real products. Some are there

for fraud and online scams. I am a victim of such disaster before I learnt my lesson in the

hard way. Internet fraud is all over my dear reader.

            As earlier quipped, internet fraud is very common on the internet market. Online

shopping is characterized with internet catastrophes. Since online shopping in the most

popular means of shopping, it is important to note that everybody is now online. Exposure of

the internet is now the avenue for some weaklings and indolent people to fraud innocent

shopping seekers. One need to be on the watch out against internet fraud when one is

sincerely going for online shopping.

           

Poor network server.           

Sometimes in developing countries of the world has poor network provider. It could in such a

way limit one’s online shopping in any form. News has made it clear that internet

connections are faster than each other; some are very slow while some are time wasters to

say.

           

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Goods in transit

           

Goods might be declared in transit when been tracked on the internet. This is a great

limitation. This hinders the buyer to receive the good at the stipulated time. He receives such

goods very late at the eleventh hour. It is very common to almost all shops. Steps are on to set

everything in the right order.

           

Currency barrier

 Not every country in the world has the same currency. Dollars are popularly used but some

countries have no access to dollars. This has limited online shopping in the recent years.

There are limitations. There are dangerous strives. There are perils. Language could also limit

online shopping. Before you pay for anything online.

93

CHAPTER - 10

RECOMMENDATIONS

94

10.0 RECOMMENDATION

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 softwares

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 (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

and prepaid cards should be used.

The consumers should be made aware that one of the safety aspect 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. As a result online users are protected from fraudulent use of

credit cards.

95

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.

Online shopping today is an incomplete, fragmented, and sometimes frustrating

process. Therefore merchants should set themselves apart from their competitors by factors

other than price, constantly innovate and move towards creating customer confidence to trade

online. They should provide massive selection at lower prices, offer a personalized customer

96

experience and their web sites should deliver a shopping experience that addresses all of the

consumer needs like recommendation about the products, feedback from other customers, etc.

Vendors should educate the customers about e-commerce like educating them on

safety tips like reading the item description, looking for a seller’s feedback score and asking

questions, detecting spoof mails and informing them about the new online crimes which

happen regularly.

In India still the penetration of Internet has not happened the way it should have been

which hampers online shopping. Ecommerce revolution can be brought about by providing

more broadband connections at affordable prices.

There is a huge market for business in the rural India therefore efforts should be such

that to bring these people also into experiencing online shopping. Companies should create

more Indian language software or content as Internet still is a primarily English language

world and language could be a barrier in rural India. Only few language portals like

webduniya.com exist today.

Most of the Indians still like to see the product before buying; efforts should be made

to change this mindset of the people by making them aware of the benefits of online

shopping.

To make online shopping big the shopping web sites should give the customers the

convenience to shop anything on a single site like ordering pizzas, movie tickets, groceries,

etc rather than in scattered places. The site should not only provide information content but

also tools to navigate and evaluate this information. The information on the site should be just

sufficient for the consumers to make a decision and not to overload them with information,

which results in confusion.

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Convenience and time saving are the main reason to shop online. Therefore Business

to Consumers (B2C) sites should be designed in such a way that consumers spend less time in

finding information they are looking for as delays in searching or loading a web page might

turn the consumers to other sites which have faster download and display times.

Since consumers control the experience they receive from shopping over the Internet,

there is a need to find ways of managing the amount of information available over the

Internet. Sites that are able to offer this information and present it in a simple way to

understand will become the preferred destination for online shopping.

The key to selling to a customer which cannot be seen is to get the customer to trust

the website with which they have electronic transactions.

Active participation from consumer marketing companies to manufacturing industries

is required to make online shopping a booming sector.

Some of the things, which the consumers should take into considerations while online

shopping, are:

Use a secure browser. The browser should comply with industry security standards,

such as Secure Sockets Layer (SSL).

Consumers should shop with the known companies, as it is easy to set up a shop

online under any name. If they are not familiar with a merchant they should ask for paper

catalogue or brochure to get a better idea about the merchandise and services and should find

about the company’s refund and return policies. Consumers should also search for the

reviews of the company.

Read the privacy policy on the site of the companies before shopping as this helps to

know what information is being collected and how it would be used.

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Keep a print record of the transactions this would come handy in case of any fraud.

One should find out how the company secures the financial and personal information

before paying the bills.

The personal information should be kept private like address, telephone numbers,

email, etc. One should avoid using telephone numbers or date of birth for establishing a

password instead should use a combination of numbers, letters and symbols.

Proper research should be done about countries shopping laws and merchant when

shopping from other countries.

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CHAPTER - 11

EXECUTIVE SUMMARY

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To help measure online shopping preferences behaviors and barriers for consumers around

the world, Pitney Bowes Inc. commissioned ORC International to survey approximately

1,000 adults each in Australia, Brazil, Canada, China, France, Germany, Japan, South Korea,

the United States, and the United Kingdom.

 

The survey, conducted online in June 2011, revealed that consumers around the world may

share some characteristics, but they also differ greatly country by country. Ninety-three

percent of consumers polled said they have purchased products online, 49 percent making an

online product purchase over the last 30 days. Shoppers in Germany, South Korea and the

U.K. responded the highest (98 percent) for making online product purchases followed

closely by Japan (96 percent) while in Canada, where online shopping was least prevalent,

more than four out of five (82 percent) reported having bought goods online.

 

Price of products (71 percent), selection of products (42 percent), the ease and speed of

online checkout processes (35 percent),and shipping costs/duties/taxes (35 percent) are the

most important considerations for purchasing products online. Overall, price of products was

the leading factor in all 10 countries. However, other preferences varied by country. For

instance, the ease and speed of the online checkout process was more important to consumers

in Germany and South Korea (both 59 percent), but much less important in Japan (11

percent).

 

High shipping costs (67 percent), additional fees at time of delivery such as duties and taxes

(47 percent), and the delivery time (39 percent) were the most important considerations for

discouraging consumers to complete purchases online. Consumers in the U.S. (83 percent),

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U.K. (79 percent) and Japan (78 percent) are the most likely to abandon online shopping carts

due to high shipping costs.

 

According to the survey, global consumers are more likely to purchase product categories

such as books, videos and music (58 percent), computer hardware and software (41 percent),

and consumer electronics (38 percent) online rather than in a brick-and-mortar store.

Consumers in China indicated they are more likely to purchase apparel (58 percent) and

footware (53 percent) online versus in a store. For almost every product category, consumers

in China responded they are more likely to purchase products online with the exception of

computer hardware and software (39 percent), and jewelry/watches and accessories (16

percent). 

 

When asked about preferences for receiving information on new products, promotions or

other offers from retailers/merchandisers, 59 percent of respondents prefer e-mail, 25 percent

prefer catalogs and direct mail, and four percent prefer both text messaging and social media

channels (Facebook and Twitter). 

 

Looking at all 10 countries, consumers in Brazil had the highest preference for receiving new

product and promotional information via e-mail (72 percent).  Consumers in Australia (33

percent) had the highest preference for receiving information via catalogs and direct mail

followed closely by Canada (32 percent), Germany (31 percent) and the U.S. (30

percent). Text messaging information had the highest preference with consumers in South

Korea (13 percent), Japan (12 percent) and China (nine percent).  Consumers in China (11

percent), and Brazil and South Korea (both five percent) responded the highest for receiving

information via social media channels. 

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CHAPTER - 12

ANNEXURE

103

12.0 ANNEXURE

12.1 Annexure 1

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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12.1 Annexure 2

FRAMEWORK FOR CONSUMERS’ INTENTIONS TO SHOP ONLINE

Source: research by Emerald

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Annexure 3

By: Thijs L. J. Broekhuizen

University of Groningen, The Netherland

Annexure 4

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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

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 5

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Top Online Travel Industry using Search Engine Marketing and their annual spend in

Rupees.

Keywords Portfolio: Online Travel India Firms

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Chapter 13

CONCLUSION

109

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

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.

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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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CHAPTER - 14

QUESTIONNAIRE

112

13.0 QUESTIONNAIRE

QUESTIONNAIRE

Kindly highlight/bold your answers.

1. Do you use Internet?

Yes No

2. How long have you been using Internet?

Less than 1 year 3 – 5 years

  1 – 3 years More than 5 years

3. 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 No

5. Which category (ies) of goods have you bought through Internet?

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Books Railway tickets

Electronic Gadgets Airline tickets

CD/Videos Computer Hardware

Accessories apparel Computer Software

Gifts Magazines

Event Tickets Movies tickets

Hotel Rooms/Car Rental Office Supplies

Jewellery Food / Groceries

Infant / Child items Home tools and products

Sporting goods Health and fitness products

Toys Any other, specify………………

6. When did u shop for the first time?

Last 6 months

6 months- 1year

1-3 year

3-5 year

More than 5 year

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7. How frequently did you purchase online?

Only once

2-4 times

More than 5 times

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. Where do you most often access the Internet?

Home Cyber-cafes

Office / College Any other, specify………

10. 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)

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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.)

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

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Jewellery Food / Groceries

Apparel gift certificates Pharmaceuticals

Infant / Child items Home tools and products

Sporting goods Home appliances

Toys Any other, specify………………

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

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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

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…………

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PERSONAL DETAILS

14. Age:

Below 18 yrs

18 - 30 yrs

31 - 40 yrs

41 – 50 yrs

Above 50 yrs

2. Educational Background:

Non-Matriculate

Matriculate

Graduate

Postgraduate

3. Occupation:

Business/Self Employed

Service/Executive

Student

Any other, specify………………

4. Gender:

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Male

Female

5. 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: ______________________________

120

CHAPTER 15

BIBILIOGRAPHY

121

BIBILIOGRAPHY

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 Behaviour, 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

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

www.flipkart.com

www.amazon .com