1

A DISSERTATION REPORT

ON

“CONSUMER’S PERCEPTION ON ONLINE SHOPPING”

2

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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ABSTRACTThe 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

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1.0 INTRODUCTION

Internet is changing the way consumers shop and buys goods and

services, and has rapidly evolved into a global phenomenon.

Many companies have started using the Internet with the aim of

cutting marketing costs, thereby reducing the price of their

products and services in order to stay ahead in highly

competitive markets. Companies also use the Internet to

convey, communicate and disseminate information, to sell the

product, to take feed back and also to conduct satisfaction

surveys with customers.

Customers use the Internet not only to buy the product online,

but also to compare prices, product features and after sale

service facilities they will receive if they purchase the

product from a particular store. Many experts are optimistic

about the prospect of online business.

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In addition to the tremendous potential of the E-commerce

market, the Internet provides a unique opportunity for

companies to more efficiently reach existing and potential

customers. Although most of the revenue of online transactions

comes from business-to-business commerce, the practitioners of

business-to-consumer commerce should not lose confidence.

It has been more than a decade since business-to-consumer E-

commerce first evolved. Scholars and practitioners of

electronic commerce constantly strive to gain an improved

insight into consumer behavior in cyberspace. Along with the

development of E-retailing, researchers continue to explain E-

consumers’ behavior from different perspectives. Many of their

studies have posited new emergent factors or assumptions that

are based on the traditional models of consumer behavior, and

then examine their validity in the Internet context.

1.1 ONLINE SHOPPING IN INDIA

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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.

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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.

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

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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-

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06. The online sales 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

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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.

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

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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.

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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)

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

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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.

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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 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

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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.

Travel sites like MakeMyTrip.com (MMT) has been growing at

about 20 per cent month-on-month, for the last four months,

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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.

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If we observe the growth of Indian online transactions (Info

by: IAMAI), it is getting doubled year by year.

The usage of internet in India is only 4% of the total

population. This is also getting increased day by day as the

costs of computers are decreasing and net penetration is

increasing. The cost of internet usage is also getting lower,

with good competition among the providers. Wi-Fi & Wimax is

also getting tested in Bangalore and other cities in India.

This will increase the usage as it goes more on wireless

internet.

Indians are proving every time that they can beat the world

when it comes to figures of online shopping. More and more

Indians are going to online shopping and the frequency of

India’s online buying is crossing the overall global averages.

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

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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.

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

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$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

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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

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.

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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 restocking fee if the consumer

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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.

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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 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.

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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

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merchants and e-commerce service providers, 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

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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.

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

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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

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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 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

34

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 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.

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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

37

38

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

39

critical in the marketing perspective, as it eventually

affects consumers’ perception of satisfaction/dissatisfaction

with the product/service.

This classic five stage model comprises the essence of

consumer behavior under most contexts. Nevertheless, the

management of marketing issues at each stage in the virtual

environment has to be resolved by individual E-marketers.

Peterson et al. [1997] commented that it is an early stage in

Internet development in terms of building an appropriate

dedicated model of consumer buying behavior. Decision

sequences will be influenced by the starting point of the

consumer, the relevant market structures and the

characteristics of the product in question. Consumers'

attitude towards online shopping is a prominent factor

affecting actual buying behavior. (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

40

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

41

transaction systems and the uncertainty of product quality.

Trust is interwoven with risk [McAllister, 1995]. One of the

consequences of trust is that it reduces the consumer’s

perception of risk associated with opportunistic behavior by

the seller [Ganesan, 1994]. Lack of trust is frequently

reported as the reason for consumers not purchasing from

Internet shops, as trust is regarded as an important factor

under conditions of uncertainty and risk in traditional

theories.

Mayer et al. [1995] developed a model which combines

traditional marketing philosophy on consumer motivation to buy

and the trust model. In this model, trust propensity; which is

a personality trait possessed by buyers; is an important

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

42

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.

43

CHAPTER - 3

PROJECT PROFILE/

OBJECTIVES

44

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

45

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

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

46

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

47

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 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.

48

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.

49

CHAPTER - 4

RESEARCH METHODOLOGY

50

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?

51

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.

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

52

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.

53

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

54

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.

55

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

56

Consumer’s intention to shop online refers to their

willingness to make purchases in an Internet store. Commonly,

this factor is measured by consumer’s willingness to buy and

to return for additional purchases. The latter also

contributes to customer loyalty. Consumer’s intention to shop

online is positively associated with attitude towards Internet

buying, and influences their decision-making and purchasing

behavior. In addition, there is evidence of reciprocal

influence between intention to shop online and customer

satisfaction.

Online shopping decision making

Online shopping decision-making includes information seeking,

comparison of alternatives, and choice making. The results

bearing on this factor directly influence consumer’s

purchasing behavior. In addition, there appears to be an

impact on user’s satisfaction. Though it is important, there

are only five studies that include it.

According to Haubl and Trifts (2000), potential consumers

appear to use a two-stage process in reaching purchase

decisions.

57

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

58

expectations. Most consumers form expectations of the product,

vendor, service, and quality of the website that they

patronize before engaging in online shopping activities.

These expectations influence their attitudes and intentions to

shop at a certain Internet store, and consequently their

decision-making processes and purchasing behavior. If

expectations are met, customers achieve a high degree of

satisfaction, which influences their online shopping

attitudes, intentions, decisions, and purchasing activity

positively. In contrast, dissatisfaction is negatively

associated with these four variables (Ho and Wu 1999; Jahng et

al. 2001; Kim et al. 2001).

Information on online shoppingSecurity & Privacy

Perceived Usefulness

Perceived Ease of use

Attitude towards online shopping

Intention to shop online

Decision Making

Online Purchase

CONSUMER SATISFACTION

Perceived Enjoyment

59

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-

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

60

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-

a) Non-probability sampling methods.

b) Probability sampling methods.

61

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.

62

CHAPTER - 5

DATA ANALYSIS

63

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

64

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.

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

Extract

ion

Information 1.000 .572

65

Percieved

usefulness 1.000 .675

Ease of use1.000 .763

Percieved

enjoyment1.000 .812

Security1.000 .260

Quality of

internet

connection

1.000 .673

Extraction Method: Principal Component Analysis.

Total Variance Explained

Compo

nent

Initial

Eigenvalues

Extraction Sums of

Squared Loadings

Rotation Sums of

Squared Loadings

66

Tota

l

% of

Varia

nce

Cumul

ative

%

Tota

l

% of

Varia

nce

Cumul

ative

%

Tota

l

% of

Varia

nce

Cumul

ative

%

1 2.57

1

42.85

3

42.85

3

2.57

1

42.85

3

42.85

3

2.41

7

40.27

6

40.27

6

2 1.18

4

19.73

2

72.58

4

1.18

4

19.73

2

72.58

4

1.33

8

22.30

8

72.58

4

3.970

16.16

2

78.74

6

4.695

11.59

2

90.33

8

5.350 5.840

96.17

8

6.229 3.822

100.0

00

Extraction Method: Principal Component Analysis.

67

68

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.

69

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

-.222 .790

70

connection

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a Rotation converged in 3 iterations.

71

Component Transformation Matrix

Compone

nt 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.

72

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)

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

73

Significant discounts are not there

Have to wait for delivery

74

Total Variance Explained

Componen

t

Initial Eigenvalues

Extraction Sums of

Squared Loadings Rotation Sums of Squared Loadings

Total

% of

Varianc

e

Cumulativ

e % Total

% of

Varianc

e

Cumulativ

e % 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.

75

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

76

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.

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

77

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

78

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.

79

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

80

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.

NO35%

YES 65%

81

The following question helped to understand who is a regular

online shopper among the 65% who had indulged into online

shopping.

82

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 tim es 5-6 tim es More than 6tim es

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.

83

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

84

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.

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 aweek

6 - 10hours aweek

11 - 15hours aweek

16 - 20hours aweek

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

85

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.

5.2 The web online activity

The following classifications are done to study the online

activities in case of a regular online shopper.

86

Fig. 5 Online Activities

10%

Shopping20%

Finance

14%

Entertainm ent

24%

Inform ation

Gathering

32%

Com m unication

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.

87

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

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shoppers are using the Internet for quiet some time now but

shopping still remains a small part of the major activity

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

Com m unicationInform ationEntertainm ent

FinanceShopping

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

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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. 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-

90

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.

91

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

occasional online buyer.

Fig. 8 Online Shopping & Gender

28%Fem ale

72%M ale

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

92

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.

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

93

to a online shopping done by a regular online shopper with

matriculate (8%) and non matriculate (3%).

Fig. 10 Online Shopping & Income

1 2 1 13

51 1

8

21

53

14

38

1511

0

5

10

15

20

25

30

35

40

Student Service/Executive Business Others

less50005000-1000010000-25000above25000

94

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 matriculate and non-

matriculate. A 60% of the shopping was done by the regular

95

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 Tim e

7%

Product

Com parison

96

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 (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.

97

Fig. 12 Barriers to Shopping Online

7%

Others9%

U nfam iliar

14%

H assle of

returning

16%

Lack of

Custom er

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.

98

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 tim es More than5 tim es

More than6 tim es

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.

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5.4.2 Satisfaction Index

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 Satisfied12%

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

100

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.

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

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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

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that satisfaction level plays an important role in online

shopping.

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 Railw aytickets

Airlinetickets

ElectronicGadgets

Gifts M oviestickets

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

103

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%

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%

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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, 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

105

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.

106

CHAPTER - 6

FINDINGS

107

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

108

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.

109

CHAPTER - 7

GENERAL DISSCUSIONS

110

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

111

hours per day...Of all those who buy online, only 25 percent

are spending more than 1,000 rupees per month while the

(remaining) 75 percent bill less than 1,000 rupees per month."

(1,000 Indian rupees is currently equal to approximately $23

US.)

The report also found that buying and search patterns among

Indians differ between genders.

"While 43 percent of male users buy online, only 31 percent of

urban female users are consumers as well. Women tend to search

more. Defying their more common attitude towards shopping,

women are more guarded when it comes to the online market,"

says Juxtconsult.

"Depending on the product type, nine percent to 25 percent are

buying online, whereas 33 to 47 percent are searching the net

for product information," it says.

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.

112

"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

113

consumers, essentially, at present only a small tribe among

them is driving online shopping momentum," says Juxtconsult.

LATEST

A new trend in this space is that of Meta search engines.

Ixigo and Ezeego are two players in this space. A Meta search

engine searches all the online travel sites (including the

airlines sites as well) and displays the best deals for the

user.

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

114

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:

115

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 buying home tools and products,

116

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

117

much to be desired. In Delhi, safety is also an issue for

women traveling alone in the evenings.

2. Literacy Rate and the Cities’ Internet Savvy Population

Most cities in India have a higher literacy rate as

compared to the national average of 64.8 percent. In fact

Mumbai has a highest literacy even amongst the cities (86

per cent). Delhi too has a high literate population (81.2

per cent). Oddly, although Bangalore has a higher literacy

rate than Delhi, at 83 per cent, the city’s share of e-

commerce is not very high. Kolkatta too has a literacy

rate (80.8 per cent) and so does Chennai (80.1 percent.)

If one compares these rates to literacy rates of cities

like Patna (62.9 percent), Jaipur (67 percent), Indore (72

percent) or Warangal (73 percent) its clear why its the

metros which are going to continue to lead e-shopping.

3 .Home delivery concept

In any case, home delivery is a concept that Indians are

familiar with and love. The mall craze has started only now.

Earlier it was a choice between sweating it out in small

crowded markets, or asking a friendly neighbourhood kirana

118

(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,

120

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,

121

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

122

CHAPTER - 8

CONCLUSION

123

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

124

up to a store .As the research suggest that increase in usage

of internet increases the online shopping so there is a need

to increase in broadband penetration as it accelerates the

growth of online trade. A huge buyers and sellers across

demographics are shopping online because of the changing

lifestyles and shopping habits but the majority of the users

are males. It was seen that despite the immense possibilities

available on the Internet it is mainly used for mailing,

chatting and surfing. E-mail applications still constitute the

bulk of net traffic in the country.

Increased Internet penetration, a hassle free shopping

environment and high levels of Net savviness see more and more

Indians shopping online.

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

125

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.

127

Thus, the online retailing raises more issues than the

benefits it currently offers.

CHAPTER - 9

LIMITATION

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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.

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130

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

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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.

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CHAPTER - 10

RECOMMENDATIONS

134

135

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

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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.

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

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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

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price, constantly innovate and move towards creating customer

confidence to trade online. They should provide massive

selection at lower prices, offer a personalized customer

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

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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.

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

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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).

141

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.

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.

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Proper research should be done about countries shopping

laws and merchant when shopping from other countries.

CHAPTER - 11

143

EXECUTIVE SUMMARY

144

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.

 

145

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), 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

146

(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

147

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. 

CHAPTER - 12

ANNEXURE

148

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

149

to it and decide to purchase in physical stores instead, which

is avoidance coping.

12.1 Annexure 2

150

FRAMEWORK FOR CONSUMERS’ INTENTIONS TO SHOP ONLINE

Source: research by Emerald

Annexure 3

151

By: Thijs L. J. Broekhuizen

University of Groningen, The Netherland

152

Annexure 4

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

153

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

Top Online Travel Industry using Search Engine Marketing and

their annual spend in Rupees.

154

Keywords Portfolio: Online Travel India Firms

155

Chapter 13

CONCLUSION

CONCLUSION:

156

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

157

To attract customers, the competing online players are

adopting all means to provide products and services at the

lowest prices. This has resulted in making the consumers

choice-spoilt, who in turn surf various websites to spot the

lowest price for the product. Thus, although the number of

transactions is increasing, the value of the products sold is

continuously falling owning to high competition and leaner

margins.

Seasonality

E-Tailing Market is faced by seasonal fluctuations. As told by

an Industry player, “August to February is the peak seasons

for sale, while March to July is the dry seasons for sale”.

During the peak season, occasions that drive the sales are

Diwali, Rakhi, Valentines Day, New Year, Christmas, Mother’s

Day, Friendship Day etc are. On these occasions younger

generations prefers buying and sending gifts online.

Credibility in Payment System

Online frauds and breach are the biggest barriers to online

sales. As a result, prospective buyers prefer staying away

from revealing their credit card and bank details.

158

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

159

CHAPTER - 14

QUESTIONNAIRE

160

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?

161

Yes No

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

Internet?

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………………

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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

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

163

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)

Communication (E-mail, Instant Messaging,

Bulletin Boards, News Groups, Chat, etc.)

Information Gathering (Research, News, Sports

scores, Search for employment, etc.)

164

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

165

Movies tickets Health and fitness

products

Hotel Rooms/Car Rental Office Supplies

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………………

166

13. What, according to you, are the most important barriers

to purchase online?

I am worried about giving out my credit card number

I don’t have a credit card

I don’t like providing personal information

I don’t want to purchase from someone with whom I am

not familiar

I enjoy going out to do my shopping

I like to see/touch the product in person, before I buy

it

Internet is too slow / Pages take too long to load

I am worried about the cost/hassle of returning the

product

Delivery costs are too high

Prices are too high

Technical foul-ups prevent transactions from going

through

167

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…………

168

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

169

Any other, specify………………

4. Gender:

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: ______________________________

170

CHAPTER 15

BIBILIOGRAPHY

171

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

172

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