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Marketing online shopping - consumer’s perception on online shopping

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Marketing online shopping - consumer’s perception on online shopping

  2. 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. 2
  3. 3. ABSTRACT The growing use of Internet in India provides a developing prospect for online shopping. If E-marketers know the factors affecting online Indian behavior, and the relationships between these factors and the type of online buyers, and then they can further develop their marketing strategies to convert potential customers into active ones, while retaining existent online customers. This project is a part of study, and focuses on factors which online Indian buyers keep in mind while shopping online. This research found that information, perceived usefulness; ease of use; perceived enjoyment and security/privacy are the five dominant factors, which influence consumer perceptions of online purchasing. A model was developed indicating online shopping behavior and acceptance among customers in India. The model was tested with a survey sample (n=100). Factor analysis technique in SPSS was used to classify these factors which buyers keep in mind while shopping online. 3
  6. 6. 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. 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 6
  7. 7. 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 The birth and growth of Internet has been the biggest event of the century. E-commerce in India has come a long way from a timid beginning in the 1999-2000 to a period where one can sell and find all sorts of stuff from a high end product to a meager peanut online. Most corporations are using Internet to represent their product range and services so that it is accessible to the global market and to reach out to a larger range of their audience. Computers and the Internet have completely changed the way one handles day-to-day transactions; online shopping is one of them. The Internet has brought about sweeping changes in the purchasing habits of the people. In the comfort of one's home, office or cyber cafe or anywhere across the globe, one can log on and buy just about anything from apparel, books, music and diamond jewellery to digital cameras, mobile phones, MP3 players, video games, movie tickets, rail and air tickets. Ease, simplicity, convenience and security are the key factors turning the users to buy online. E-commerce revenues in the country are projected to reach Rs 2,300 crore in the year 200607, 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 7
  8. 8. 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 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 8
  9. 9. transactions per month in India has gone up from 2 lakh in 2003-04 to 4.4 lakh in 2004-05 and has doubled to 7.95 lakh transactions per month in the year 2005-06. The online sales during the festival season had increased rapidly especially during Diwali and Ramzan which recorded a sales of Rs115 crore, a 117 per cent increase from the Rs53 crore in the year 2004-05(source IAMAI). These figures clearly show that online shopping has truly come of age and consumers are keen to shop on the net. Effective customer communication on products plus reduced shipping costs and timely delivery has helped online marketers to seize a slice of the Rs 115 crore sales. Online shopping has become the latest trend among shoppers. Indians are becoming more comfortable with e-commerce. The consumer’s attitude has been evolving towards online purchases. It has become increasingly positive over the years. The attitudes that drive people to shop online, such as convenience, price comparison and choice are improving tremendously in India. Though a miniscule amount in the global context, the Indian online shoppers’ population would make its presence felt quite remarkably. The potential of the Indian e-market can be gauged from the fact that 16 percent of Indian consumers want to buy online in the next six months, making it the third most online-potential country after Korea (28 percent) and Australia (26 percent) (Source:IMRB). This is an indication of a growing breed of Indian consumers who are not only better equipped but also more confident of the online transactions. Indian businesses have also grown mature enough to move up the IT curve and they are considering Business to consumer (B2C) e-commerce a viable revenue model. Some 9
  10. 10. of the companies that have benefited are,,,,, and 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 $1520,000/month/client by the year-end, which is over 100 percent growth (Source:Indiamart). Brick-and-mortar businesses are also building up e-commerce revenues. In the year 2005-06 Samsung India recorded a 120 percent jump in online buying from its site over the year 2004-05 (Source: Samsung). Nirula’s witnessed more than double growth in its B2C ecommerce 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. 10
  11. 11. 1.1.1 Online Activities The Internet has entered the mainstream consciousness over the past decade. This has happened primarily because the web has got a graphical interface and Internet has moved from governmental control to private hands. The activities which are happening on the Internet are email and instant messaging, general web surfing or browsing, reading news, hobby searches, entertainment searches, shopping and buying online, medical information searches, travel information searches, tracking credit cards, and playing games. Communication i.e. email, chat or instant message is the basic activity for which Internet is used. It is the single most important reason for people to go online. E-mail provides the opportunity to communicate more often with a much broader circle of people than one can reach by telephone or by mail in a convenient way. In India too email constitutes the major activity on the Internet. It was found that more elderly people are increasingly using email as compared to the younger generations. In India the top five online activities are e-mail, surfing, chatting, search and job search. Some of the sites, which are commonly used for these particular activities, are:  Yahoo -Most preferred communication portal, tops for email and chat  Indiatimes –Best event and sports news provider.  Naukri-Best recruitment portal  Google-Best information domain  Shaadi-Best for matrimonial services  eBay-Best online shopping portal 11
  12. 12. (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 million in the year 2006-07. The market size of the Indian online recruitment industry in 2005-06 was 145 crore and it is estimated to reach Rs 241 crore for 2006-07 (source IAMAI) this is mainly because of the increase in the internet penetration which has lead to an increase in the users for whom net has become a convenient way to meet their needs. Every year thousands of graduates pass out and look for employment opportunities, for these job seekers Internet is the most convenient (24 hour a day) and the comprehensive medium to research and look for jobs. Internet is advantageous to both the job seekers (saves time and cost) and to the recruiters (easy access to the best talent pool) as a result there is a win a win situation. 1.1.3 Banking & Trading The net banking is increasing and it is estimated that 4.6 million Internet users are using Internet for banking purposes and it is expected to grow to 16 million plus by 2007-08 (Source IAMAI). Trading stocks is also becoming a fast booming activity amongst the Indians. The traders feel that trading through Internet is not that cheap but the convenience provided by online trading is worth the costs involved. Traders can keep a regular check on various stocks and it is easier to compare them. They can not only buy and sell stocks but can also find the track record of various stocks, do technical analysis, can access live news 12
  13. 13. 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,, Yahoo India matrimony,, and These marriage portals have increased because there is a rise in the career orientation among youngsters and increasing work pressures have resulted in less time for socializing. These youngsters are becoming more independent and are now making their own decision in respect of choosing their life partners. The marriage portals provide them the medium to interact with the people who match their required profiles. These portals not only help in finding a better match but also provide with services of astrologers, decorators, wedding planners and caterers thus providing a whole lot of services in one basket. More Indians are registering to these matrimonial portals and there seems to be a huge growth in the coming years. 1.1.5 Online Ticketing The growth in the online travel business today is phenomenal. The Indian online travel business is worth $350-400 million and is growing at 40-50 per cent year by year, as the online population of the country is estimated to be 25 millions (Source:IMRB). There has been a significant increase in online ticket booking in India with a double-digit growth, 13
  14. 14. 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 (MMT) has been growing at about 20 per cent month-onmonth, for the last four months, selling 1,400 tickets a day on an average (Source: The online bookings in India was mainly stared because of the low cost carriers like Air Deccan which sells most of it tickets online. The revenue of the Indian Railway Catering and Tourism Corporation (IRCTC) has also increased phenomenally because of the online ticketing. The advantages of online ticketing are both for providers and for consumers as the providers benefit from infrastructure cost while for users it is a convenient way to book tickets. Thus Internet has become an indispensable part of life and has reduced the world to a global village. Many corporates are getting into this bandwagon, as there seem to be a humongous growth in the coming years. Airline, cinema, hotel bookings, etc are all increasingly going online. The future of online business is bright therefore companies are providing more convenient services to the consumers and thereby changing their mindsets and attitudes towards life. It is a fact that a great online shopping revolution is expected in India in the coming years. There is a huge purchasing power of a youth population aged 18-40 in the urban area. If we observe the growth of Indian online transactions (Info by: IAMAI), it is getting doubled year by year. The usage of internet in India is only 4% of the total population. This is also getting increased day by day as the costs of computers are decreasing and net penetration is 14
  15. 15. 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 • 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. 15
  16. 16. • 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 $522 million in 2008 and it is expected to rise above $700 million by end March 2010. • Indians are also Shopaholics like other Asians. There is a strong booming young adult population in India with good levels of disposable income. In India Over $50 Billion and growing rapidly - Most popular online shopping products include: books (45%), electronic gadgets (42%), railway tickets (38%), accessories apparel (35%), apparel (35%), gifts (34%), computer and peripherals (32%), airline tickets (28%), music downloads (21%), movie downloads (21%), hotel rooms (22%), magazines (18%), tools (16%), home appliances (16%), toys (16%), jewelry (17%), movie ticket (15%), etc. Payments Online shoppers commonly use a credit card to make payments, however some systems enable users to create accounts and pay by alternative means, such as: • Billing to mobile phones and landlines • Cash on delivery (C.O.D., offered by very few online stores) • Cheque/ Check • Debit card • Direct debit in some countries 16
  17. 17. • 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. 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 includes labels for free 17
  18. 18. 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 cancels their order in accordance with the Consumer Protection (Distance Selling) Act 2000). Information and reviews Online stores must describe products for sale with text, photos, and multimedia files, whereas in a physical retail store, the actual product and the manufacturer's packaging will be available for direct inspection (which might involve a test drive, fitting, or other experimentation). Some online stores provide or link to supplemental product information, such as instructions, safety procedures, demonstrations, or manufacturer specifications. Some provide background information, advice, or how-to guides designed to help consumers decide which product to buy. Some stores even allow customers to comment or rate their items. There are also dedicated review sites that host user reviews for different products. Reviews and now blogs gives customers the option of shopping cheaper org anise purchases from all over the world without having to depend on local retailers. In a conventional retail store, clerks are generally available to answer questions. Some online stores have real-time chat features, but most rely on e-mail or phone calls to handle customer questions. Price and selection One advantage of shopping online is being able to quickly seek out deals for items or services with many different vendors (though some local search engines do exist to help 18
  19. 19. 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. 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. 19
  20. 20. Computer security has thus become a major concern for 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 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. 20
  21. 21. • Ensuring that the retailer has an acceptable privacy policy posted. For example note if the retailer does not explicitly state that it will not share private information with others without consent. • Ensuring that the vendor address is protected with SSL (see above) when entering credit card information. If it does the address on the credit card information entry screen will start with "HTTPS". • Using strong passwords, without personal information. Another option is a "pass phrase," which might be something along the lines: "I shop 4 good a buy!!" These are difficult to hack, and provides a variety of upper, lower, and special characters and could be site specific and easy to remember. Although the benefits of online shopping are considerable, when the process goes poorly it can create a thorny situation. A few problems that shoppers potentially face include identity theft, faulty products, and the accumulation of spyware. Whenever you purchase a product, you are going to be required to put in your credit card information and billing/shipping address. If the website is not secure a customers information can be accessible to anyone who knows how to obtain it. Most large online corporations are inventing new ways to make fraud more difficult, however, the criminals are constantly responding to these developments with new ways to manipulate the system. Even though these efforts are making it easier to protect yourself online, it is a constant fight to maintain the lead. It is advisable to be aware of the most current technology and scams out there to fully protect yourself and your finances.One of the hardest areas to deal with in online shopping is the delivery of the products. Most 21
  22. 22. 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 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 optout 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 22
  23. 23. 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. 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 23
  25. 25. 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 problemsolving behaviors and then towards extensive problem-solving behaviors [Schiff man et al., 2001]. The traditional framework for analysis of the buyer decision process is a five-step model. Given the model, the consumer progresses firstly from a state of felt deprivation (problem recognition), to the search for information on problem solutions. The information gathered provides the basis for the evaluation of alternatives. Finally, post-purchase behavior is critical in the marketing perspective, as it eventually affects consumers’ perception of satisfaction/dissatisfaction with the product/service. This classic five stage model comprises the essence of consumer behavior under most contexts. Nevertheless, the management of marketing issues at each stage in the virtual environment has to be resolved by individual E-marketers. Peterson et al. [1997] commented that it is an early stage in Internet development in terms of building an appropriate dedicated model of consumer buying behavior. Decision sequences will be influenced by the starting point of the consumer, the relevant market structures and the characteristics of the product in question. Consumers' attitude towards online shopping is a prominent factor affecting actual 25
  26. 26. buying behavior. (Source: Jarvenpaa Journal of Electronic Commerce Research, VOL. 6, and NO.2, 2005) Todd [1997] proposed a model of attitudes and shopping intention towards Internet shopping in general. The model included several indicators, belonging to four major categories; the value of the product, the shopping experience, the quality of service offered by the website and the risk perceptions of Internet retail shopping. In the research conducted by Vellido et al. [2000], nine factors associated with users' perception of online shopping were extracted. Among those factors the risk perception of users was demonstrated to be the main discriminator between people buying online and people not buying online. Other discriminating factors were; control over, and convenience of, the shopping process, affordability of merchandise, customer service and ease of use of the shopping site. In another study, Jarvenpaa et al. [2000] tested a model of consumer attitude towards specific webbase stores, in which perceptions of the store's reputation and size were assumed to affect consumer trust of the retailer. The level of trust was positively related to the attitude toward the store, and inversely related to the perception of the risks involved in buying from that store. Jarvenpaa et al. [2000] concluded that the attitude and the risk perception affected the consumer's intention to buy from the store. Consumer risk perceptions and concerns regarding online shopping are mainly related to aspects involving the privacy and security of personal information, the security of online transaction systems and the uncertainty of product quality. Trust is interwoven with risk [McAllister, 1995]. One of the consequences of trust is that it reduces the consumer’s perception of risk associated with opportunistic behavior by the seller [Ganesan, 1994]. Lack of trust is frequently reported as the reason for consumers not purchasing from Internet 26
  27. 27. shops, as trust is regarded as an important factor under conditions of uncertainty and risk in traditional theories. Mayer et al. [1995] developed a model which combines traditional marketing philosophy on consumer motivation to buy and the trust model. In this model, trust propensity; which is a personality trait possessed by buyers; is an important antecedent of trust. In Internet shopping, there is not much information available to the buyer regarding the seller, prior to purchase. A buyer with a high propensity to trust will more likely be a potential customer than a buyer with a lower propensity. Mayer et al. [1995] proposed that ability, benevolence and integrity constitute the main elements of trustworthiness. Ability refers to skills, competencies and characteristics that a seller has in a specific domain. In this context, sellers need to convince buyers of the competence of their companies in the Internet shopping business. Benevolence is the extent to which the seller is perceived by the buyer as wanting to ‘do well’. Sellers have to convince buyers that they genuinely want to do good things for buyers, rather than just maximize profit. 27
  29. 29. 3.0 PROJECT PROFILE 3.1 Objective of the Study The objective of this research study is to investigate online consumer behavior, which in turn provides E-marketers with a constructional framework for fine-tuning their E-businesses’ strategies. The specific objectives of this research are: 1. To know the consumers awareness and perception about the products and services provided on internet. 2. To know how it provides products and services and satisfies their customers. 3. To know how it reduces the uncertainty in purchase decision process. 3.2 Scope of the Study 1. The Study was conducted among the Internet users. 2. The Geographical area covered was Sec-18 Noida, Sec-29 Noida, 3. The Study was based on a Schedule of Questions. 4. The scope of internet shopping It was a time of past to spared your business in market by conventional methods. Old market is today converted in high tech markets. Today if you want to purchase any item from abroad you need not to go or you need not to call them for a sample. You can find their products and see the catalogue on internet. Internet enables you to shop throughout world from the comfort of your home. Internet has some special characteristics which no other medium have. Only internet can provide you such special information even no salesman can help you as internet helps. Countless 29
  30. 30. 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 products, compare the prices and quality and view the products from different angles. Testimonials and reviews are the unique feature of shopping where you can share your experiences with other users/consumers. The most exciting aspect of internet shopping is that it is a 24x7 affair! And youre free to shop on your leisure hours and even holiday are useful for shopping for you. Your time is best valued here. You need not to go market so no tension of conveyance, pollution, traffic etc. The other dimension is that you directly purchase the items from original merchant in online shopping no mediator comes between you and merchant so it becomes cheaper to purchase item. Fewer mediators less price. Merchant will also save his money by selling of goods on internet. merchant need not to spent for staff, showroom, other shop expenses. He can sale by less resources and less expenses, some online store do not have their physical showroom they display their product and services online and deliver goods on customer 's door such merchant save a lot of expenses and they work in less capital thats why they are able to sale goods on low prices. Internet has a very bright future. If you want to increase your business and cross the boundaries of region you need to take help of internet. Without going online you cant 30
  31. 31. 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 is the one name in one of the fastest and largest shopping search engine. Here you can search every type of products at competitive prices. Visit 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. 31
  33. 33. 4.0 RESEARCH METHODOLOGY 4.1 Research Objective To know and understand the consumer’s perception and awareness about internet marketing/ shopping. This will help to know the attitude and perception of consumers towards online shopping and what are the factors which shape the consumer’s perception towards online shopping. Also what are key concerns from the point of view of consumer while online shopping. 4.2 Determination of information needs and sources The following was the information required: • What is consumer’s attitude towards online shopping? • What are the key concern areas for consumers while online shopping? • Which factors shape the consumer’s attitude towards online shopping? • How has been recent shift taking place in online shopping? 4.3 Research Framework Eleven different factors were identified by studying the existing models of consumer attitudes(Refer Annexure 1, 2) that play an important role in online purchase, then a model was proposed leading to online shopping. 33
  34. 34. 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 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 34
  35. 35. Perceived usefulness is defined as the degree to which a person believes that using a particular system would increase his or her job performance. It is an important factor affecting acceptance of an information system, because the ultimate aim of any person is the superior job performance. Perceived Ease of Use This is an important factor that affects the acceptance of a particular information system. It is defined as the degree to which a person believes that using a particular information system would be free of effort. Hence an application perceived to be easier to use would more likely be accepted by the user. Perceived Enjoyment Enjoyment refers to the extent to which the activity of using a computer is perceived to be enjoyable in its own rights. This is seen as an intrinsic source of motivation to use a particular application. Amount of Information Amount of information is defined as the information which is available for the product which a person wants to buy through online shopping. This factor eases the decision of the user to actually buy the product or not, or which product to buy. This factor becomes even more important in case of High Involvement product. Security and Privacy Security and privacy are the main factors which hinder the growth of online shopping. The user is concerned about his ID and Password which can be stolen by persons with wrong 35
  36. 36. intentions and then misuse it. At the same time they are concerned that their personal information may be sold to the third party which poses a serious threat to their privacy. 36
  37. 37. Quality of Internet Connection Not only is the presence of internet connection necessary but also its Quality is important to shop online. This is an important factor which determines whether the user would shop online or not because presence of internet is a basic necessity for this mode of shopping Attitude and perception towards online shopping Consumer’s attitude and perception toward online shopping have gained a great deal of attention in the empirical literature. It is believed that consumer attitudes will affect intention to shop online and eventually whether a transaction is made. It refers to:1) The consumer’s acceptance of the Internet as a shopping channel 2) Consumer attitudes toward a specific Internet store (i.e., to what extent consumers think that shopping at this store is appealing). Intention to shop online Consumer’s intention to shop online refers to their willingness to make purchases in an Internet store. Commonly, this factor is measured by consumer’s willingness to buy and to return for additional purchases. The latter also contributes to customer loyalty. Consumer’s intention to shop online is positively associated with attitude towards Internet buying, and influences their decision-making and purchasing behavior. In addition, there is evidence of reciprocal influence between intention to shop online and customer satisfaction. Online shopping decision making Online shopping decision-making includes information seeking, comparison of alternatives, and choice making. The results bearing on this factor directly influence consumer’s 37
  38. 38. purchasing behavior. In addition, there appears to be an impact on user’s satisfaction. Though it is important, there are only five studies that include it. According to Haubl and Trifts (2000), potential consumers appear to use a two-stage process in reaching purchase decisions. Initially, consumers typically screen a large set of products in order to identify a subset of promising alternatives that appears to meet their needs. They then evaluate the subset in greater depth, performing relative comparisons across products based on some desirable attributes and make a purchase decision. Online purchasing This is the most substantial step in online shopping activities, with most empirical research using measures of frequency (or number) of purchases and value of online purchases as measures of online purchasing; other less commonly used measures are unplanned purchases Online purchasing is reported to be strongly associated with the factors of personal characteristics, vendor/service/product characteristics, website quality, attitudes toward online shopping, intention to shop online, and decision making (Andrade 2000; Bellman et al. 1999) Consumer satisfaction It can be defined as the extent to which consumer’s perceptions of the online shopping experience confirm their expectations. Most consumers form expectations of the product, vendor, service, and quality of the website that they patronize before engaging in online shopping activities. 38
  39. 39. 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 shopping Security & Privacy Attitude towards online shopping Intention to shop online Decision Making Online Purchase Perceived Usefulness Perceived Ease of use CONSUMER SATISFACTION Perceived Enjoyment 4.4 Data Collection Method4.4.1 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 toolQuestionnaire- 39
  40. 40. Questionnaire development is the critical part of primary data collection method. For this I will prepare a questionnaire in such a way that it will be able to collect all relevant information regarding the project. The questionnaire was designed using various scaling techniques. The questionnaire was used mainly to test the model proposed for consumer perception towards online shopping. Likert five point scales ranging from Strongly Agree to strongly disagree was used as a basis of Questions. The data collection was done over a period of 8 weeks This was done by going directly to the respondents or through mails. 4.4.2 Secondary Data It will be collected to add the value to the primary data. This may be used to collect necessary data and records by different websites, magazines, annual reports, journals, reference books, and newspapers, etc. 4.5 Sample Design 4.5.1 Sample Unit For studying consumer perception on online shopping, samples were selected from noida ncr. 4.5.2 Sample Media The respondents in the samples are reached through personal interviews. 4.5.3 Sampling Methods 40
  41. 41. Sampling methods fall under two broad categoriesa) Non-probability sampling methods. b) Probability sampling methods. 4.5.4 Sample size- 100 4.5.5 Research place- NCR region 4.5.6 Sample Design I have prepared this project as descriptive type, as the objective of the study. 41
  42. 42. CHAPTER - 5 DATA ANALYSIS 42
  43. 43. 5.0 DATA ANALYSIS The objectives of the research were studied with respect to a regular online shopper who shopped more than once because they would be the right respondent to give an insight about the online shopping. Therefore it is firstly important to understand who is a regular online shopper. In the survey the respondents where asked the following questions which helped to know about a regular shopper. 1) FOR FACTORS AFFECTING ONLINE SHOPPING Respondents were asked to rate the factors influencing online shopping purchase behavior. In all six different factors were taken in questionnaire for getting the responses of consumers .Here are those factors: • Information about online products and services • Perceived usefulness • Ease of use • Perceived enjoyment • Security • Quality of internet Factor analysis was done using SPSS to extract the most important benefits derived by customers’ point of view from the usage of online shopping. 43
  44. 44. RESULTS OF FACTOR ANALYSIS KMO AND BARTLETT'S TEST Kaiser-Meyer-Olkin Measure of .667 Sampling Adequacy. Bartlett's Test of Approx. Chi83.193 Sphericity Square df Sig. 15 .000 Communalities Initial Extraction 1.000 .572 1.000 .675 1.000 .763 1.000 .812 1.000 .260 Information Percieved usefulness Ease of use Percieved enjoyment Security Quality of internet 1.000 .673 connection Extraction Method: Principal Component Analysis. Total Variance Explained 44
  45. 45. Extraction Sums of Initial Eigenvalues % of Compo Varianc Cumulat Rotation Sums of Squared Squared Loadings % of Loadings % of Varianc nent Total e ive % Total e 1 2.571 42.853 42.853 2.571 42.853 2 1.184 19.732 72.584 1.184 19.732 3 .970 16.162 78.746 4 .695 11.592 90.338 5 .350 5.840 96.178 6 .229 3.822 100.000 Extraction Method: Principal Component Analysis. Cumulat ive % 42.853 72.584 Varianc Total 2.417 1.338 Cumulat e 40.276 22.308 ive % 40.276 72.584 45
  46. 46. Component Matrix (a) Component 1 2 Information .563 .505 .797 .201 .836 -.253 .886 -.166 .365 -.355 Percieved usefulness Ease of use Percieved enjoyment Security Quality of internet .054 .819 connection Extraction Method: Principal Component Analysis. a 2 components extracted. Rotated Component Matrix(a) Information Component 1 2 .362 .664 46
  47. 47. Percieved usefulness .684 .456 .873 .040 .890 .139 .463 -.213 -.222 .790 Ease of use Percieved enjoyment Security Quality of internet connection Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 3 iterations. 47
  48. 48. Component Transformation Matrix Componen t 1 2 1 .943 .334 2 -.334 .943 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Interpretation: The value of KMO test is coming out to be 0.667, which suggests the validity for factor analysis. The principal component analysis is giving 72.584 as commutative % which is good enough because data redundancy is less. Two components have been extracted with Eigen values more than 1 after principal component analysis and rotated component analysis. The output value shows that following factors can be safely extracted after factor analysis: • Information about online products and services(Extracted from component 2) • Perceived usefulness (Extracted from component 1) • Ease of use(Extracted from component 1) • Perceived enjoyment(Extracted from component 1) • 48
  49. 49. 2) FOR FACTORS CONCERNING ONLINE SHOPPING Respondents were asked to rate the factors of concern for online shopping purchase behaviour.In all six different factors were taken in questionnaire for getting the responses of consumers .Here are those factors: • Not sure of product quality • Cannot bargain/negotiate • Not sure of security of transactions/credit card misuse • Need to touch and feel the product • Significant discounts are not there • Have to wait for delivery 49
  50. 50. Total Variance Explained Extraction Sums of Squared Initial Eigenvalues Loadings % of Component 1 Total Cumulative Variance % Rotation Sums of Squared Loadings % of Total Cumulative Variance % Total % of Variance Cumulative % 2.437 40.625 40.625 2.437 40.625 40.625 2.418 40.292 40.292 1.226 20.428 61.052 1.226 20.428 61.052 1.221 20.357 60.649 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-3.636E-15 100.000 2 3 16 Extraction Method: Principal Component Analysis. 50
  51. 51. RESULTS OF FACTOR ANALYSIS Component Matrixa Component 1 not sure of product quality cannot bargain/negotiate not sure of security of 2 3 .964 -.161 .055 .211 .933 -.024 .796 -.092 .728 there have to wait for delivery -.004 .145 product significant discounts are not .055 .235 .964 transactions/credit card mis use need to touch and feel the -.004 -.721 -.165 -.284 Extraction Method: Principal Component Analysis. a. 3 components extracted. Rotated Component Matrixa Component 1 not sure of product quality cannot bargain/negotiate 2 3 .953 .050 -.115 .152 .059 -.765 not sure of security of .953 .050 .152 .046 .010 .966 -.087 .793 .077 .762 -.048 -.236 transactions/credit card mis use need to touch and feel the product significant discounts are not there have to wait for delivery 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 2 3 .992 .069 .103 -.089 .973 .213 -.085 -.220 .972 51
  52. 52. Component Matrixa Component 1 not sure of product quality cannot bargain/negotiate not sure of security of 2 3 .964 -.161 -.004 -.721 .055 .235 .964 -.004 .055 .145 .211 .933 -.024 .796 -.092 .728 -.165 -.284 transactions/credit card mis use need to touch and feel the product significant discounts are not there have to wait for delivery Extraction Method: Principal Component Analysis. a. 3 components extracted. Rotated Component Matrixa Component 1 2 not sure of product quality cannot bargain/negotiate 3 .953 .050 -.115 .152 .059 -.765 not sure of security of .953 .050 .152 .046 .010 .966 -.087 .793 .077 .762 -.048 -.236 transactions/credit card mis use need to touch and feel the product significant discounts are not there have to wait for delivery Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 4 iterations. Component Transformation Matrix Compon ent 1 1 2 .992 3 .069 .103 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. 52
  53. 53. 53
  54. 54. INTERPRETATION: The principal component analysis is giving 78.065 as commutative % which is good enough because data redundancy is less. Three components have been extracted with eigen values more than 1 after principal component analysis and rotated component analysis. The output value shows that following factors can be safely extracted after factor analysis: • Not sure of product quality (Extracted from component 1) • Transactions/credit card misuse (Extracted from component 1) • Have to wait for delivery (Extracted from component 1) Significant discounts are not there (Extracted from component 2 54
  55. 55. I Have you purchased anything online ever? Fig. 1 Total Purchase Online The research showed that 65% of the Internet users had shopped online while 35% had not bought anything. This is mainly because of the changing lifestyle and taste patterns. As the life is getting more and more fast paced more people are moving on to shop online mainly because of convenience. This shows that a more Internet users are using it as a shopping medium and there is a huge potential in this sector but one should not be carried away by this figures. There could be a possibility that only a small section of the online shoppers are shopping or only a particular category of good had brought about this huge number. As a result the entire analysis was done in case of a regular online shopper to understand the shopping behavior of the online shoppers. The following question helped to understand who is a regular online shopper among the 65% who had indulged into online shopping. 55
  56. 56. II How frequently did you purchase online? Fig. 2 Frequency of Online Purchase 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. 56
  57. 57. 5.1 The Internet Usage It is necessary to study the amount of time spend by the regular shoppers on the world wide web because this would give us clear picture as to understand whether usage and time spent by the regular online shoppers has an effect on online shopping or not. Fig. 3 Online Shopping & Internet usage by years The diagram shows that shopping has increased with the usage of Internet over the years. Regular shoppers who have been using Internet for more than one year had shopped to 98% and regular shoppers who have been using Internet for more than five years have shopped to 78%. Internet is not a new concept for these regular online shoppers and they have been using it for more than 5 years now. The increased usage over the years has lead to an increase in shopping, as these regular shoppers are able to make use of the various ecommerce activities. 57
  58. 58. Fig. 4 Online Shopping & Internet usage by hours a week The research shows that 36% of the online shopping had been done who use Internet for more than 20 hours a week and 96% of the shopping has been done by regular shoppers who have been using Internet for more than 5 hours a week. As more the regular online shopper are using the Internet it is seen that they end up buying more also. This shows that Internet is becoming an integral part of the daily activity of the regular online shopper. The regular online shoppers who have been using Internet for more than 20 hours are more comfortable and confident as a result they purchase more online as compared to who use Internet for less number of hours. The study shows that the growing usage of Internet has lead to increase in online shopping as seen above. There is a positive relation between increase usage of Internet and online purchase. The marketers should capture this enormous growth, which can be brought by the penetration of broadband and lowering the prices of computers. Thus increase in usage of Internet over the years and the more time spent has lead to an increase in shopping. But one needs to know whether online shopping is an integral part of regular shoppers or not this understood as follows. 58
  59. 59. 5.2 The web online activity The following classifications are done to study the online activities in case of a regular online shopper. Fig. 5 Online Activities 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. 59
  60. 60. Fig. 6 Online Activities by Age This classification further provides an insight that Internet is mainly used as a means of communication in respect all the age groups of the regular online shoppers. It contributes to 60% of the major activity among the regular online shoppers who lie between the age group 18-30 years. It could be seen that shopping as a basic activity on the Internet contributes to the minimum. Internet as a medium of shopping is maximum used by regular online shoppers between the age group18-30 years, which is 18% while above 50 years it is used just to 2%. The increase in usage among the 18-30 years is basically due to high awareness. The marketers should focus mainly on the age group between 18-30, as they are the main drivers for growth. Thus the research shows that though the regular shoppers are using the Internet for quiet some time now but shopping still remains a small part of the major activity 60
  61. 61. Fig. 7 Online Activities by Time It is evident that regular online shoppers also spend a major part of their time in communication unlike the occasional online buyers. In 0-5 hours a week they spend 77% of their time in communication, which includes email, and chat as the major activity with shopping which does not seem to exist at all. Information search constitute 20% of the time. The information search increases as the regular online shoppers tries to figure out ways to surf the Internet and access the information they require. It is true that more regular online shoppers use Internet shopping sites to gather information about products rather than to make a direct purchase. But it is to be noticed that as the time spend increases communication falls and other activity picks up like entertainment and finance. One could see from the graph that between 16-20 hours a week communication falls further but information search also falls as the regular online shoppers becomes more focused in their information search rather than wandering aimlessly in the Internet space. They continuously use search engines for routine information needs. The time spent on entertainment increases marginally to 18%. As the people spend more time it has been seen that activities like shopping and finance related needs increases. 61
  62. 62. The regular online shoppers who use the Internet for more than 20 hours a week has shown that they have indulged into more shopping i.e.10%. It is true that as the regular online shoppers spends more time on the Internet there is a possibility that they would end up buying more as they are ease with the use of internet. Increased usage of Internet is positively related to the buying behavior on the Internet. AnalysisIt is true that increase in internet has lead to an increase in the online shopping as 78% of the online shopping has been done by the regular online shopper who have been using internet for more than five years and 36% of the online shopping have been done among the regular shopper who uses the Internet for more than 20 hours a week. Thus increase in usage of Internet has lead to an increase in online shopping. But shopping still constitute a small amount of the major activity on the internet as 32% of the regular online shoppers uses Internet for communication while only 10% uses it for shopping. Communication still constitutes the major activity on the Internet. 5.3 Demographic Factors Online behavior is affected by demographics i.e. by gender, education and income. 5.3.1 Hypotesis 1. More male Internet users are frequent online buyers than female Internet users. 2. Regular online buyers are better educated than occasional online buyers. 3. Income is higher in case of a regular online shopper than occasional online buyer. 62
  63. 63. Fig. 8 Online Shopping & Gender Among the 65% of the online shopping, males (72%)had purchased more as compared to women (28%). This shows that it is true that more males are shopping online as compared to women. This is mainly because women still like to feel, see and touch the product before buying. It was noticed that some of them felt shopping as a reason to go out with the family and spend time together, which was not possible in case of online shopping. As more and more Indian women are flocking to Internet there is a possibility that they might end up in a purchase. Also an increase in the spending power in the hands of the women might lead to an increase in the online shopping. The research showed that 28% of the women who shopped online fall mostly in the service and executive class with an income above Rs10,000. The marketers should make sure that they produce the item keeping in mind the needs of the women population as they still continue to be an important decision maker when shopping for the family. 63
  64. 64. Fig. 9 Online Shopping & Educational Qualification Educational difference is a significant demographic variable, which shows that regular shoppers who were better educated made more purchases online. 89% of the shopping has been done by the regular shopper whose is educated with a graduate or postgraduate degree. This shows that frequency of purchase is more in case of a higher educated regular shopper as compared to a online shopping done by a regular online shopper with matriculate (8%) and non matriculate (3%). 64
  65. 65. Fig. 10 Online Shopping & Income Income and buying behavior are positively related. It was seen that a regular online shopper with a higher income had purchased more online as compared to lower income online shopper. This trend was seen in all segment of the population. It is true that more the income in the hands of the population they would indulge in shopping. The service class had done the major purchase in all the various levels of income. It can be seen that hardly any purchase is done among the regular online shopper whose income lies below Rs5000. AnalysisThus 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 65
  66. 66. matriculate and non-matriculate. A 60% of the shopping was done by the regular shopper who had income more than Rs 25,000 than 40% who had income less than Rs.25,000. 5.4 Motivating & Satisfaction Factors To identify the factors which Internet users choose to buy or not buy online and how frequently they make such purchases. Analyzing the importance of satisfaction level in the online purchasing environment. 5.4.1 Hypothesis Consumers who make frequent online purchases are higher in convenience orientation than those who purchase occasionally. Fig. 11 Online Shopping & Motivating Factors 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 66
  67. 67. 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. Fig. 12 Barriers to Shopping Online 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 67
  68. 68. should formulate such strategies so that the privacy and security concern can be taken care off. Fig. 13 Convenience- The Motivating Factor 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. 68
  69. 69. 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 A 55% of the regular online shoppers were satisfied with 12% dissatisfied. An important thing to be noted is that only 2% of the regular online shoppers were highly satisfied while 31% of the regular online shoppers were neither satisfied nor dissatisfied. This shows satisfaction level plays an important role in online shopping with more regular shoppers falling under the category of satisfied. This shows that they were overall satisfied by the experience of shopping online. But the companies should take measures so that the dissatisfied and the neither satisfied nor dissatisfied category of regular online shoppers could be moved to satisfied or highly satisfied. A note should be taken that only 2% of the regular online shoppers are highly satisfied which shows that there are still concerns, which poise the regular shoppers from using the Internet frequently as a shopping medium. 69
  70. 70. Satisfaction level can also be measured by the frequency with which the online shoppers purchase online. According to human psychology it is true that frequency of purchase depends upon the satisfaction level received. According to the figure 2 (already explained), a 74% of the regular online shopper has purchased 2-4 times and 9% had purchased more than 6 times indicating that an increase in the confidence level and accepting the Internet as a shopping medium. The increase in the frequency of shopping was mainly because they were overall satisfied by the entire shopping experience. AnalysisIt is seen that the main orientation for buying among the regular online shoppers were convenience (32%), saves time (26%), price (23%), product availability and superior selection (12%), and product comparison (7%). The hypothesis stated that convenience is major factor motivating the regular shopper was true as 75% of the regular online shoppers who have shopped more than 5 times felt it was necessary as compared to 25% who shopped less than 5 times. The barriers to online shopping as stated by the regular online shopper were privacy and security (33%), inability to touch and feel the product (21%), customer service problems (16%), hassle of returning the product (14%), purchasing from unfamiliar source and person (9%) and other problems (7%). Satisfaction level plays an important role in online shopping, as 55% of the regular online shoppers that are satisfied tend to purchase more. It can also be seen that 74% have shopped more 2-4 times and 11% had shopped more than 5 times showing that satisfaction level plays an important role in online shopping. 70
  71. 71. 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 It is seen that railway tickets 70% and airline tickets 93% are the most popular categories among the online shoppers followed by books and electronic gadgets. This is the main category, which is bringing about online shopping culture among the regular online shoppers. The companies should bring out innovative ways so that there is a growth in other categories of goods also. The entire shopping culture among the regular shoppers is brought mainly by the travel categories followed by electronic gadgets. The graph shows that online shopping is tend to grow in the coming years as consumers want to buy more in the future. Table 1 Future Categories of Goods Railway tickets 83% 71
  72. 72. Airline tickets 80% Electronic Gadgets 50% Books 43% Gifts 33% Movies tickets 30% Jewellery 23% Computer Software 20% Hotel Rooms/Car Rental 20% Event Tickets 13% Toys 13% Infant / Child items 10% Food / Groceries 7% Accessories apparel 3% CD/Videos 3% Magazines 3% Home tools and products 3% Sporting goods 3% The table I shows that shows that there is a future growth in the electronic gadget and book categories also apart from railway and airline tickets, which continues to be on the priority list. There is a growth in these categories because traditionally products like audio-video, 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 (,, which lure the consumers to buy these products. These goods do well because consumers are not bothered much about the touch and feel factors, which generally drive the shopping in 72
  73. 73. 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. AnalysisThere 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. 73
  74. 74. CHAPTER - 6 FINDINGS 74
  75. 75. 6.0 FINDINGS The findings show that Internet usage has increased over the years and it is leading to an increase in online shopping and also shows the consumers attitude and perception towards online shopping. Communication still forms the major activity among the large number of online shoppers as 32% of regular online shopper use Internet for communication as compared to shopping (10%). Online shopping is affected by demographics as it has been seen that more males are shopping online as compared women online shoppers and there is a positive relation between education and income levels with respect to the increased online shopping behaviour. The most important motivating factor, which influenced the online shopping, was convenience followed by time saving and price. Regular online shoppers considered convenience as the main motivating factor while buying and were less price sensitive. But the online marketers should attempt to differentiate their products or services making the comparison easier. The marketers should bring out innovative ways so that the consumers can do more online shopping while taking the full advantage of rich information, easy access and convenience of the Internet. One of the main concerns among the online shoppers was privacy and security. Another reason that hindered online shopping was the touch factor. Consumers still preferred the experience they get from traditional stores like feeling the store’s atmosphere, interacting with a salesperson, and seeking sensory stimulation. This might hinder the use of certain goods like grocery and apparel, as the touch factor is the main factor, which drives the shopping for these goods. The future of online shopping is bright especially in the categories of travel, books, electronic gadgets and gifts. 75
  77. 77. 7.0 GENERAL DISCUSSION 7.1 Indian E-Comm. Report Finds Heavy Spenders Driving Sales By Devin Comiskey August 16, 2008 A Survey by Indian research organization Juxtconsult found that more and more Indian Internet users are opening their wallets online. While such hurdles as limited broadband access and security concerns remain, the report finds there are currently more than 10 million shoppers online in India. While current trends point to increased e-commerce growth in India, the online marketplace in the country of more than 1 billion people is still relatively small. Juxtconsult's survey found that 40 percent of all urban Internet users buy online, while 42 percent of the sales originate through just five percent of consumers. The survey was conducted in April 2008and sampled more than 30,000 users. "This section of buyers spends 5,000 rupees or more per month on the net," states the report. "It is interesting to note that two out of every three heavy spenders are also 'netholics,' those who are on the net for more than three hours per day...Of all those who buy online, only 25 percent are spending more than 1,000 rupees per month while the (remaining) 75 percent bill less than 1,000 rupees per month." (1,000 Indian rupees is currently equal to approximately $23 US.) The report also found that buying and search patterns among Indians differ between genders. "While 43 percent of male users buy online, only 31 percent of urban female users are consumers as well. Women tend to search more. Defying their more common attitude 77
  78. 78. 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. "The single biggest motivation for buying online for net users is saving time. Thirty-two percent of them look to shop online with this purpose. Convenience of shopping '24x7' and home delivery are other major incentives," says the report. "However, the concern of possible misuse of credit card or personal information is extremely significant among online buyers, with almost 55 percent of them voicing their concern. Clearly, tackling and countering the issue of online safety figures as an imminent challenge for net marketers." 7.3 Books, CDs Top the List The products that are purchased most online in India, according to Juxtconsult, are books and CDs - making up 25 percent of all online purchases. "Ironically, computer hardware and software, despite having the home advantage are among one of the least bought products online, with only 13 percent buying them," says the report. "In sum, the online market in India is blossoming but is yet to take off in a considerable way. The Internet is still being used more for searching than buying products and services. Though a noticeable proportion of net users are also net consumers, essentially, at present only a small tribe among them is driving online shopping momentum," says Juxtconsult. 78
  79. 79. 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 79
  80. 80. 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: CITY Mumbai Delhi Chennai Kolkata Bangalore LOGGING ONTO E-SALES Share in 08-09 Projection for 09-10 24% 40% 20% 30% 7% 11-12% 7% 10-11% 6% 9% It was never thought that Indians would go in for e-shopping in such a big way. Ticketing, travel bookings and even books and movies seem fine to buy online. Knowing that in India sizes vary from brand to brand and quality is inconsistent, even of some electronic items, how is it that there are people buying these items online? Well, Assocham says that books are the hottest selling item on the internet. In fact most products bought and sold off online are: books, electronic gadgets and railway tickets. However, people are also buying clothes; gifts, computer and peripherals, and a few are buying home tools and products, home appliances, toys, jewelry, beauty products and health and fitness products. 80
  81. 81. Traffic for e-commerce sites is mostly coming from the two metros of Delhi and Mumbai. Here are few reasons for this: 1. Convenience It is the major reason. Both the cities are spread out over a large area and the best stores in both these cities are often concentrated in certain ‘posh’ areas. In Mumbai for example there are certain items you get only in Crawford market which is at the other end of town in South Mumbai. And demographics show that the population of Mumbai is now concentrated in the suburbs. Of course, huge malls have come up in the suburbs as well, and India’s biggest mall Nirmal Lifestyle is in far-flung Mulund but often you find a better choice of sizes and styles choice in other malls, say Phoenix (central Mumbai). And though both Mumbai and Delhi have transport system, few people like to travel for two hours just to get to a shop at the other end of town. Clearly the transport systems leave much to be desired. In Delhi, safety is also an issue for women traveling alone in the evenings. 2. Literacy Rate and the Cities’ Internet Savvy Population Most cities in India have a higher literacy rate as compared to the national average of 64.8 percent. In fact Mumbai has a highest literacy even amongst the cities (86 per cent). Delhi too has a high literate population (81.2 per cent). Oddly, although Bangalore has a higher literacy rate than Delhi, at 83 per cent, the city’s share of ecommerce 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. 81
  82. 82. 3 .Home delivery concept In any case, home delivery is a concept that Indians are familiar with and love. The mall craze has started only now. Earlier it was a choice between sweating it out in small crowded markets, or asking a friendly neighbourhood kirana (grocer) to deliver groceries home and this system is still thriving. 4. Increase in the Internet users Increasing penetration of Internet connectivity and PCs has led to an increase in the Internet users across India. The demographic segments that have witnessed maximum growth comprise college going students and young persons. These segments are the users of advanced applications and technologies online and are most likely to be heavy E-Commerce users. 4. Increase in the number of buyers and sellers The success of a marketplace depends on the presence of a large number of buyers and a large number of sellers. In addition to online buyers, many offline stores have begun to sell their products in the online marketplace. The greater the number of sellers and buyers, the faster the market grows. 82
  83. 83. PRODUCT PREFERENCES CITY WISE • Bangalore loves to buy books, electronic gadgets, computer peripherals, gifts movies, bookings, actually just about everything. • Well, Kolkatta prefers to buy music and movies online • Mumbai leads in all categories, except jewellery. • Delhites seem to prefer buying jewellery online as compared to any other city Indian E-Comm. Report Finds Heavy Spenders Driving Sales By Devin Comiskey August 16, 2008 A Survey by Indian research organization Juxtconsult found that more and more Indian Internet users are opening their wallets online. While such hurdles as limited broadband access and security concerns remain, the report finds there are currently more than 10 million shoppers online in India. While current trends point to increased e-commerce growth in India, the online marketplace in the country of more than 1 billion people is still relatively small. Juxtconsult's survey found that 40 percent of all urban Internet users buy online, while 42 percent of the sales originate through just five percent of consumers. The survey was conducted in April 2008and sampled more than 30,000 users. "This section of buyers spends 5,000 rupees or more per month on the net," states the report. "It is interesting to note that two out of every three heavy spenders are also 'netholics,' those 83
  84. 84. who are on the net for more than three hours per day...Of all those who buy online, only 25 percent are spending more than 1,000 rupees per month while the (remaining) 75 percent bill less than 1,000 rupees per month." (1,000 Indian rupees is currently equal to approximately $23 US.) The report also found that buying and search patterns among Indians differ between genders. "While 43 percent of male users buy online, only 31 percent of urban female users are consumers as well. Women tend to search more. Defying their more common attitude towards shopping, women are more guarded when it comes to the online market," says Juxtconsult. "Depending on the product type, nine percent to 25 percent are buying online, whereas 33 to 47 percent are searching the net for product information," it says 84
  85. 85. CHAPTER - 8 CONCLUSION 85
  86. 86. 8.0 CONCLUSION The e-commerce is one of the biggest things that have taken the business by a storm. It is creating an entire new economy, which has a huge potential and is fundamentally changing the way businesses are done. It is believed that electronic commerce will become a huge industry in the coming years and online shopping is now becoming a significant part of the consumers daily life to meet their never ending requirements in a convenient way. Online shopping is picking up and is becoming a trend. More consumers are indulging into Internet shopping as seen by the research because of the value proposition it offers to a customer such as convenience, 24x7 shopping, doorstop delivery, a broad product selection and the ever-expanding range of unique and unusual gift ideas as well as increased consumer confidence in shopping on the internet is increasing. The main motivating factor seen during the research was the convenience and customer service which drives the people to online shopping as a result today they are buying airline and railway tickets, books, home appliances, electronic gadgets, movie tickets, etc by logging on to a web site, than driving up to a store .As the research suggest that increase in usage of internet increases the online shopping so there is a need to increase in broadband penetration as it accelerates the growth of online trade. A huge buyers and sellers across demographics are shopping online because of the changing lifestyles and shopping habits but the majority of the users are males. It was seen that despite the immense possibilities available on the Internet it is mainly used for mailing, chatting and surfing. E-mail applications still constitute the bulk of net traffic in the country. 86
  87. 87. Increased Internet penetration, a hassle free shopping environment and high levels of Net savviness see more and more Indians shopping online. 8.1 Barriers to the Growth of Online Market 8.1.1 Consumer Bias Consumers often display a bias for brands that they know well and have had a good experience in the past. Thus products of brands with a favorable bias will score over the products of less popular brands. A few would risk buying expensive jewelry from an unknown jeweler online. 8.1.2 Lack of ‘Touch –Feel-Try’ Experience The customer is not sure of the quality of the product unless it is delivered to him and post delivery of the product, it is sometimes a lengthy process to get a faulty or the unsuitable product changed. Thus, unless the deliverables are as per the customers expectations, it is hard to infuse more credibility in the e-Tailing market. 8.1.3 Mounting Competitive Pressures To attract customers, the competing online players are adopting all means to provide products and services at the lowest prices. This has resulted in making the consumers choicespoilt, 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. 87
  88. 88. 8.1.4 Seasonality E-Tailing Market is faced by seasonal fluctuations. As told by an Industry player, “August to February is the peak seasons for sale, while March to July is the dry seasons for sale”. During the peak season, occasions that drive the sales are Diwali, Rakhi, Valentines Day, New Year, Christmas, Mother’s Day, Friendship Day etc are. On these occasions younger generations prefers buying and sending gifts online. 8.1.5 Credibility in Payment System Online frauds and breach are the biggest barriers to online sales. As a result, prospective buyers prefer staying away from revealing their credit card and bank details. 8.1.6 Untimely Delivery of Products It might take a few minutes to search, book and pay for products and services online, but the delivery of the product may take unreasonable time. It is a challenge for E-marketers to convert low frequency online buyers into regular buyers through successful website design and by addressing concerns about reliable performance. Thus, the online retailing raises more issues than the benefits it currently offers. 88
  89. 89. CHAPTER - 9 LIMITATION 89
  90. 90. 9.0 LIMITATION Every study will have its problems and limitations at some point during the project. This study is no different. The use of a non-probalistic sample in the research was a major limitation because there was no way to make sure that the sample taken represented the total population of the Internet users. A non-probability sample lacks the accuracy and precision that a probability sample might offer. Though this samples provided a better insight about the online shoppers but there could be a possibility that a respondent may have done online shopping but is not a regular Internet user. It was seen that some respondents were biased towards some questions. Another major limitation encountered doing the research assignment was the issue regarding the time. Limitation of the study is the selection of the existing studies. Owing to time limitation, only a few number of journals were searched. This may leave some other prominent empirical studies out. In addition, owing to the multidisciplinary nature of online shopping, it would be very interesting to compare IS literature to other disciplines that study online shopping attitudes and behavior. 90
  91. 91. LIMITATIONS, PERILS AND DANGERS OF ONLINE SHOPPING Scams and internet fraud is no more news in the internet world. Scammers have gone deep online. Millions of dollars are reported every day of the year to be lost by innocent souls. Men and women are duped online every day without any form of comfort in their lives. Since the internet is for all and sundry, excessive exposure to it could be dangerous and risky. The problem with online shopping ranges from A to Z. They are avoidable if they are known. It should be clear that not everybody online is there to buy or sell real products. Some are there for fraud and online scams. I am a victim of such disaster before I learnt my lesson in the hard way. Internet fraud is all over my dear reader. As earlier quipped, internet fraud is very common on the internet market. Online shopping is characterized with internet catastrophes. Since online shopping in the most popular means of shopping, it is important to note that everybody is now online. Exposure of the internet is now the avenue for some weaklings and indolent people to fraud innocent shopping seekers. One need to be on the watch out against internet fraud when one is sincerely going for online shopping. Poor network server. Sometimes in developing countries of the world has poor network provider. It could in such a way limit one’s online shopping in any form. News has made it clear that internet connections are faster than each other; some are very slow while some are time wasters to say. 91
  92. 92. 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. 92