final mrp report

Chapter I

Introduction

1.1 OverviewInternet is changing the way consumers shop and buy 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 communicates and disseminate information, to sell the product, to take feedback and also to conduct satisfaction surveys with customers. Customers use the Internet not only to buy the product online, but also to compare prices, product features and after sale service facilities the will receive if they purchase the product from a particular store. Many experts are optimistic about the prospect of online business.In addition to the tremendous potential of the E-commerce market, the Internet provides a unique opportunity for companies to more efficiently reach existing and potential customers. Although most of the revenue of online transactions comes from business -to- business commerce, the practitioners of business-to-consumer commerce should not lose confidence .It has been more than a decade since business-to-consumer E-commerce first evolved. Scholars and practitioners of electronic commerce constantly strive to gain an improved insight into consumer behavior in cyberspace. Along with the development of E-retailing, researchers continue to explain E-consumers 'behavior from different perspectives. Many of their studies have posited new emergent factors or assumptions which are based on the traditional models of consumer behavior, and then examine their validity in the Internet context.

1.2Theoretical Foundation

The Internet has developed into a new distribution channel and online transaction are rapidly increasing. This has created a need to under how the consumers perceive online purchasing.Price, Trust and Convenience were identified as important factors. Price was considered as to be a most important factor for a majority of the students. The internet has created a paradigm shift of the traditional way people shop. A consumer is no longer bound to opening a times or specific location. So he can become active at virtually any time any place and purchase the products or services.

The internet is relatively a new medium for communication and the information exchange that has present in everyday life. The number of internet user is constantly increasing which is also signifies that online purchasing is increasing. The rapid increasing is explained by the consumer behavior. The internet is considered a mass medium that provides the consumers with purchase characteristics as no other medium. Certain characteristics are making it more convenient for the consumer compared to the traditional way of shopping, such as the ability to any time view and purchase products visualize the needs with products and discuss products with other consumers. Online shopping is the process of consumer go through the when they decide the shop on the internet. The internet has developed into a new distribution channel and the evaluation of this channel. E-commerce has now identified. Using the internet to shop online has become one of the primary reasons to use the internet combined with searching for products and finding the information about them. Therefore internet develop the Companies also use the Internet to convey, communicate and disseminate information, to sell the product, to take feedback and also to conduct satisfaction surveys with customers. Customers use the Internet not only to buy the product online, but also to compare prices, product features and after sale service facilities they will receive if they purchase the product from a particular store. Many experts are optimistic about the prospect of online business.Due to the rapid development of the technologies surrounding the Internet, a company that is interested in selling products from its web site will constantly has to search for an edge in the fierce competition. Since there are so many potential consumers, it is of the out most importance to be able to understand what the consumer wants and needs.

1.3 Online Shopping In India

It is a fact that a great online shopping revolution is expected in India in the coming years. There is a huge purchasing power of a youth population aged 18 -40 in the urban area.

1.3.1 Rising Connectivity

If we observe the growth of Internet Subscribers, it is getting doubled year by year. The usage of internet in India is only 4% of the total population. This is also getting increased day by day as the costs of computers are decreasing and net penetration is increasing. The cost of internet usage is also getting lower, with good competition among the providers. Wi-Fi & Wimax system has also started 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.

1.3.2 Few Factors That Boost Online Shopping in India

) Rapid growth of cyber cafes 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

1.3.3 Few Facts about Online Shopping

The figures from IAMAI show that the internet users in India will grow to 200 million by 2010. Around 25% of regular shoppers in India are in the 18-25 age groups, and 46% are in the 26-35 year range.

) Indian online matrimonial sector is worth around $230 million

) Worldwide E-commerce is only growing at the rate of 28%, since India being a younger market, the growth of e-commerce is expected at 51% in the coming years.) In line with global trends finally India has also started shopping online these days. As per the study by IAMAI online shopping in India has rose from$11million in 1999-2000 to $522 million in 2007 and it is expected to rise above

$700 million by end March 2010.

1.3.4 Changing Attitude towards Online Shopping:

"Awareness, Future Demand Focus for Emerging Markets & Current Issues" Malls springing up everywhere and yet people are E -shopping! And not in small numbers either. Consumers are more rational nowadays and have ability to get the choices from the market. Awareness among the consumers is spread through internet. The number of internet users is increasing day by day which attracts people who have an option to buy online. It was never thought that Indians would go in for e-shopping in such a big way

1.4 E-Commerce Briefing

E-Commerce is a huge domain on conducting business over internet and e-retailing is part of it. When we discuss on digitally / Internet enabled commercial transactions between organizations and individuals using latest web technologies as per the policies of the Organization it takes the form of e-business. Nowadays, 'e' is gaining momentum and most of the things if not everything is getting digitally enabled. Thus, it becomes very important to clearly understand different types of commerce or business commonly called as e-Commerce.

There are mainly five types of e-commerce models

1. Business to Consumer (B2C)This model involves organizations as business houses and consumers and customers. This is the most common model in e-commerce. In this model, online businesses sell to individual consumers. When B2C started, it had a small share in the market but after 1995 its growth was exponential. In this business model the business house will have a e-commerce website which will list all their product categories with detailed information about products with photographs, flash animation and comparing similar products etc., for quick decision making over web. E.g. An online Music portal selling CD's / DVD's and streaming Audio on the web e.g. www.imusti.com.

2. Business to Business (B2B)

It is the largest form of e-commerce involving business of trillions of dollars. In this form, the buyers and sellers are both business entities and do not involve an individual consumer. It is like the manufacturer supplying goods to the retailer or wholesaler. E.g. www.indiaplaza.in is a online store, which sells popular branded products to consumer, where its supply chain network directly linked to Manufacturer. Hence Business to business model.

3. Consumer to Consumer (C2C)E-Bay is an excellent example for this model an auction site where a consumer can sell their antique or old used items at discounted price to others, rest of the consumers who are all interested in those items will bid for that. This auction will happen for a time period and ends; now the highest bidder will make payment and buy the product. Here e-bay plays a role of having / facilitating a platform to make consumer to consumer transactions.

4. M-CommerceNow a day's all business executives were busy and want to do financial transaction without going physically to bank. Example: Consumer want to pay their utility payments viz., Insurance premium, Telephone bills, Income taxes etc., Transfer money to anybody in this world via mobile banking (e.g. ICICI Bank iMobile) opens up the new technology of ecommerce as Mobile commerce. Further the regular online stores were also optimizing their site user interface design in order to make consumers shop from their mobile devices viz., iPad, iPhone, Android enabled phones, and Microsoft windows mobile 6.x enabled devices.

There are other types of e-commerce business models too like Business to Employee (B2E), Government to Business (G2B) and Government to Citizen (G2C) but in essence they are similar to the above mentioned types. Moreover, it is not necessary that these models are dedicatedly followed in all the online business types. It may be the case that a business is using all the models or only one of them or some of them as per its needs.

1.5 E-RETAILING Business Plan

To start an e-Retailing business, an organization or an individual should have the below.

1. A Unique Idea I Product to sellWhen all Personal computer assemblers sell PC's and Servers in a traditional way, Michael Saul Dell, founder CEO of Dell Inc., got a unique idea of selling PC's over web. Beyond this he allowed users to choose all components one by one based on their interests and requirements and delivered and assembled PC over web, which was a grand success.

2. A Perfect Business PlanIs all about the e-Retailing business idea, Product or services, people involved, their expertise, a Project report with all standard projected statements prepared by a professional team, Competitor analysis, Capital investment, Loans, Business location, Government regulations & policies, Technology plans, and IT infrastructure required.

3. Technology PlansOrganization may start off in a small way and then based on the response they can get more funding and grow in a big way.

They need to finalize an attractive easy to remember domain name e.g. www.dell.com .Need to finalize a hosting server to book web space from their various plans e.g. www.Hostmonster.com to start with and later go for their own scalable IT infrastructure setup based on the response and growth.Need to Acquire IT team for developing e-Commerce website or to outsource the work. Also we can think of using Open source like OS Commerce a popular e- Commerce application and Open source CRM application for customer relationship.If we are going to develop from the scratch on our own technology, the below website development process will be followed as per Fig. 3. Web site development process.Compare and finalize Payment gateway based on their initial setup fee / transaction fee the popular payment gateway service providers are CC Avenue, ICICI, Bill desk, Pay pal and few more players.Once the website is launched, related internet marketing, popularly called as SEO (search engine optimization) work to be started to increase the popularity and visitors of the site.Plan and organize supply chain management to deliver product or service to the online users who place orders. Post Sales support plans.

4. E-RETAILERS BACK OFFICE MANAGEMENTThere will be a huge team working on the back end systems of the web site which is called as control panel / system admin.

In which a group of people will be updating the product categories, products, prices, specifications and many other information before it's getting listed in the website.

Other than this to attract more users, the Marketing team will often send mailers / newsletters by giving more offers.

For a basic idea below image depicts the minimum required pages for a e-Retailers web site.

Figure-1

5. Payment Gateway

Now the e-Retailers web site is ready with products listed and when the online users orders the product online, the Retailers should link the Bank account with 3rd party payment gateway, to which the payment will be credited.

6. HOW AN E-COMMERCE SITE WORKSNormally a user will get to know about a online shopping web site through many ways, most frequently all online users will find websites on the go by using Google search or any other search engines.

When they see the web site information link, they click to it, complete the website registration process if any, choose the products they are interested, compare similar products specification cost etc., and confirm the items selected and finalize the invoice and make payment via their debit card / credit card bank account or via Pay Pal or Google checkout.

Once the payment is received the merchant will receive the payment, start processing the order, and ship the product to the user's delivery / shipping address.

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Further if the product is carrying warranty, post sales support and service should be facilitated to the customer in order to create good word of mouth and get a good returning customer base which is the key success factor for the e-Retailer.

Let me illustrate the buying process in the image below:

Figure-2

1. Online visitor of the site, will pick up the items to be purchased.2. Confirming / finalizing the item list selected and checkout.3. Enter the credit / debit card / Pay Pal information to make the payment.4. User payment information is getting checked with banker via payment gateway and once its authenticated.5. The payment will be credited to retailer account and an Order confirmation is shown to the visitor along with order details and shipping information.

The visitor will also be notified on the purchase made via email.

The visitor will be able to track their order status and an SMS / email update will be frequently sent to visitor on the product or service delivery.

Chapter II

Review of literature

When it comes to India, though, you cant just go by numbers and comparisons. The thing we repeatedly hear is that India is a unique market with unique challenges, which also means it creates unique opportunities. Given all this, who are going to be these successful e-Commerce players of tomorrow?I think the successful companies of tomorrow are going to look different from the ones that are on the top now. Theres going to be 100-200 million new e-Commerce customers that are going to be up for grabs in the next few years. Another way to look at it is that in 80% of the e-Commerce shoppers of 2016 still are available to be nabbed by e-Commerce sites. And theyre going to come from predominantly two categories. First, from Tier-2 and Tier-3 cities as the logistics and connectivity there improve and second, young people that get jobs/pocket-money and start shopping online.

2.1 GLOBAL PERSPECTIVES Chanaka Jayawardhena, Len Tiu Wright and Charles DennisThe research carried out by them on "Consumers Online: Intentions, Orientations, Segmentation". This paper reflects the purchase intentions of online retail consumers, segmented by their purchase orientation. These findings indicate that consumer purchase orientations in both the traditional world and on the Internet are largely similar. Therefore, both academics and businesses are advised to treat the Internet as an extension to existing traditional activities brought about by advances in technology, i.e. the multi-channel approach.

Ruby Roy Dholakia and Kuan pin ChiangThe research carried out by them on "Factors Driving Consumer Intention to Shop Online". This study empirically examined the influence of convenience, price, and product type on consumers intention to shop online. The results of the study indicate that convenience influences consumers intention to shop online. When consumers perceive shopping offline as inconvenient, they are more likely to shop on the Internet.

Vanitha Swaminathan and Andrew J. Rohm The research carried out by them on "A Typology of online shoppers based on shopping motivation". This study represents an important first step in extending the general shopping literature to the context of online shopping. Variety seeking and convenience were found to be significant motivating factors in the online shopping context. Time savings and recreational motives were significant motives in the offline but not the online context, suggesting that these factors may serve to differentiate the shopping types across these channels

Lohse, G.L., Bellman & E.J. (Murdoch Research University)The research carried out by them on "Consumer buying Behavior on the internet. This research lays out the importance on U.S. Customers perspective about the Online Shopping & Various other factors which motivates them & restraint them from online shopping & various other classification of the classes according to their needs Demographic factors.

2.2 INDIAN PERSPECTIVES Shubham Goswami & Meera MathureThe research carried out by them on "Retail Goes Online: An Indian Perspective". Compared to countries like United Kingdom, United States, Australia, Canada and others, India is still in its nascent stage of e-shopping. But the real growth that online retailers are betting on in India is an increase in buying in smaller towns and cities that have no access to modern retail. There are divergent views on the future of e-retailing in India. Some experts are of the opinion that the giant, big brand retailers would dominate the small ones due to their wider investment capacities. It would be next to impossible for the small retailers and the kiranas to prove their existence in the battlefield of online retailing.Another viewpoint is that there would be an exponential growth in the online retailing business in India. Though much is yet to be achieved, remember E-tailing is a new industry in India. With broadband internet access still accessible to entire population, this industry may see an explosive growth. Most growth drivers are in Indias favor demographics, economy, changing lifestyle, exposure to new ideas. It is just a question of creating a sustainable eco system for E-tailing, which is at an inflection point. Shweta Sharma & Sugandha MittalThe research carried out by them on "Prospects of Ecommerce in India"This Paper put emphasis on how a developing country can become industrialized and modernized if it can extensively apply IT to enhance productivity and international competitiveness, develop e- commerce and e-governance applications. An information-based society or knowledge based society is composed of IT products, IT applications in society and economy as a whole. Many countries in Asia are taking advantage of e-commerce through opening of economies, which is essential for promoting competition and diffusion of Internet technologies. Large enough to have a critical mass of 10 to 20 million users to be able to make an impact on e-commerce and e-governance. In the next 3to 5 years, India will have 30 to 70 million Internet users which will equal, if not surpass, many of the developed countries. Internet economy will then become more meaningful in India. With the rapid expansion of internet, ecommerce, is set to play a very important role in the 21st century, the new opportunities that will be thrown open, will be accessible to both large corporations and small companies.

Alka Raghunath & Murli Dhar PangaThe research carried out by them on "Problems & Prospects of E-commerce"This paper focuses on with the development of computer technology, the World Wide Web has become the connection medium for the networked world. Computers from locations that are geographically dispersed can talk with each other through the Internet. As with any new technology, there are positives and negatives associated with its use and Adoption. Finally, an e-marketplace can serve as an information agent that provides buyers and sellers with information on products and other participants in the market.

E-commerce creates new opportunities for business; it also creates new opportunities for education and academics. It appears that there is tremendous potential for providing e-business education.

Scott M. Smith, Chad R. Allred, William R. Swinyard (2008) in their research paper they discusses online shopping in context of diffusion of innovation theory. It proposes that online shopping is a discontinuous innovation whose adoption rate is influenced by several of Rogers' (2004) diffusion deterrents. A new 12 item 'Computer Competence Index' (CCI) is proposed and tested using data from an internet - administered US probability study of 1800 online users. E-Shoppers are profiled using a tertile split of the CCI. Each tertile's demographics, computer activities, computer - oriented lifestyles, and online purchase activities are reported. A.M. Sakkthivel (2009) in their research paper aims to identify the impact of demographics on consumer buying behaviour towards online purchase of different products based on the involvement and investment (High, Medium and Low). It attempts to unearth the impact of the demographics on online purchase which is at present relatively limited. It would help the marketers to identify the demographic profile of consumers which is otherwise not known due to the intangible nature of internet. The findings would help the marketers to design their offerings based on the demographic profile of online consumers and would help the online marketers to identify and segment the online consumers which will enhance their focus and eventually leads to financial growth.

Jianwei Hou, Cesar Rego (2007) in their study in traditional auctions, it is often assumed that bidders are a homogenous group. However, since most online bidders are average consumers instead of professional bidders, we suspect that online bidders are a heterogeneous group. The purpose of this paper is to explore the types of online bidders based on their real bidding behaviour in the context of consumer -to-consumer online auction market. A cluster analysis is employed and four types of online bidders are finally identified in a private value auction, namely, goal -driven bidders, experiential bidders, focused bidders, and opportunistic bidders. The profile and performance of each group are also discussed.

David Anderson (0 2 . 0 2 . 2 0 0 6 ) in their research carried out by a consumer behaviour researcher at Henley Management College has investigated what drives people to search online. The findings reveal that convenience, time-efficiency and personal control are the key drivers for consumers to search online, rather than cost. It also shows that the relationship between traditional and online retailing outlets needs to be more unified E-shopping has changed the face of retail, and surfers are now looking for spring sale bargains. This is following a bumper e-Christmas, where Internet shopping soared almost 50% during the 10-week run-up to Christmas 2005 (IMRG).

However, the new findings reveal that convenience and personal control are the key drivers for consumers to search online. Dr Susan Rose, from Henley Management College,

said: "What motivates online shoppers is the ability to shop, where, when and how they like. Nowadays people can shop over their Shreddies in the morning. The research, that analyses data from 304 electrical goods Internet shoppers, provides businesses with a guide to getting the information highway buzzing with potential customers. Big-ticket items such as digital TVs, cameras, or iPods now feature on our e - shopping list. The Internet provides a rich source of information about brands and retail channels that enable us to search and find information to help us with our final purchase decision. For businesses there are some steps to help them embrace the Internet revolution with success. A key factor driving Internet use for 'online window shopping' is its usefulness in our personal lives. The Internet frees time and makes the information search process, Research suggests that people search online for some goods, yet buy from a traditional high street retailer, or look around for goods in shops, then take their search online. In turn, it is essential for retailers who operate both on and off line to ensure that they embrace a joined up process that appears seamless to the customer. Some retailers have still to successfully unite the two retailing methods - this is key to contemporary customer service. Factors such as how much the medium challenges us mentally and our confidence to navigate and understand the technology can turn us on or off the idea of browsing online for products. A clear divide is appearing between the occasional online shopper and the regular experienced user. Concerns about how easy the system is to use have almost disappeared for online shopping enthusiasts, but for occasional users e-tailing sites need to be easy to navigate. Websites must be accessible and operate efficiently. The research found that the expectation of getting a good financial deal is still a strong motivator to seek out products online, but this is secondary to the importance but, many people steer clear of electronic buying because of security worries. Only once online retailers can reassure customers about fraud and privacy, will the online shopping curve really take off. Worries about the risk involved, in terms of financial transaction and privacy remain. A move from 'big brands' to 'bargains' may only take place once.

Rajeev Kamineni (JAN 1999) in their study The World Wide Web can change human behaviour and human interactions to a large extent. Web based shopping behaviour is one major example to point out the trends in this direction. This study is of a very exploratory nature and it intends to establish the differences between several web - based shoppers from

different parts of the world. Several critical factors associated with online shopping behaviour will be explored. A cross cultural data set will be collected and an illustrative description of the shoppers will be provided. As a final step the cross cultural differences between several shoppers will be explored. One question which will run as a theme throughout the course of this paper is, "Will the traditional consumer behaviour theory and research be altered by the advent of web based shopping?"

There is a huge difference between a physical store and its electronic counterpart. A help button on the home page of the web-shopping site replaces the sales clerks' friendly advice and service. The familiar layout of the physical store becomes a maze of pull down menus, product indices and search features. Now more than ever, the promise of electronic commerce and online shopping will depend to a great extent upon the interface and how people interact with the computer. At the same time, there are some inherent difficulties in maintaining an online inventory. In a regular store, the managers can pull out a product from the shelf if they feel that it is not fast moving or has no demand. This is a privilege that cannot be extended to the online retail store.

Anita Desai (2003) in her study E-tailing is the practice of selling retail goods on the internet. It is the abbreviated version of "electronic retailing" which essentially constitutes business to consumer transaction. While the concept of online retailing or e - tailing is no longer in its nascent stage; it continues to evolve, as advanced e-commerce applications act as a potent catalyst in the development of e-tailing.

The idea of online retailing or e-tailing which almost every net-savvy individual is familiar with; offers a convenient mode of shopping online and the consumer gets to choose from a diverse range of products and services as opposed to the analogous physical shopping experience. Furthermore, online retailers or e-tailers get to expose and sell their products to a global audience through their e-stores. (Also termed as online stores, internet shops, web shops etc.)

The E-commerce industry plays a vital role in its growth and development. The consumer or buyer is usually provided with detailed information and description of the product which helps them make a judicious choice before making an online purchase. For consumers who face a paucity of time or want a diverse range of products to choose from, e-tailing proves to be an ideal option. Every e-tailer wants his/her share of domain amidst the vast World Wide Web galaxy. Due to the intense competitor quotient involved, every e-tailer out there wants to offer their customer/buyer a smooth and pleasant shopping experience. Therefore, e-tailing is just not restricted to putting up products for sale for consumers to buy. As consumers today are well -informed, it is understood that they would make a well informed decision as well. This involves a fair amount of product research, price comparison and checking the credibility of the e-store.

This section will provide all information regarding the thesis background, purpose, research questions, limitations of survey and theories. It presents the introduction of consumer behavior, online shopping, and consumer behavior towards online shopping in India.

2.3 Background

2.3.1 Consumer Behavior

"Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society." (Kuester, 2012)

With the reference of above cite; Consumer behavior of every individual is different from other depending on buying choices which is influenced by buying habits and choices that are turn tampered by psychological and social drivers that affect purchase decision process. (Brassington, F. and Pettitt, S., 2000)

"We're not aware of changing our minds even when we do change our minds. And most people, after they change their minds, reconstruct their past opinion - they believe they always thought that." (KEYS, 2011)

As quoted above, consumer behavior about decision making is difficult to define and is a system of short cuts and rule of thumb which is unpredictable. The short cuts in decision making vary from person to person and focusing on the past experience of consumers; we can predict the future trends by bringing profitable products and services into the market. In this modern world, the popularity of interactive media like the World Wide Web is increasing day by day with rapid pace. With reference to marketing it is continuously realized that the main two factors observed due to WWW are 1)Most of the companies are doing theirbusiness online and make their website as showroom of their product and services. 2) Fast increment of consumer segments due to increase needs and demand including online shopping as well. (Ha'ubl, 2000, p. 5).

2.3.2 ECommerce I online shopping

Internet makes life simple and innovative. People are doing business online and trade has become more easy and fast due to this. Internet provides new ways to promote business. Website becomes the essence of online business as to show their services and products. Internet gathers all competitors and consumers in one place. It brings new lane to promote, advertise products and services in market (Barry Silverstein, 2002, p. 3).

Total global E-commerce sale in 2011 have grown to Euro 690 billion (USD 961 billion) and recorded an increase of 20 % with an estimation of increase in the coming years and to cross the 1 trillion Euro mark in 2013. Asia pacific region is leading in terms of growth as compared to mature markets like US, UK, Japan and European countries. Asia Pacific recorded 130 % growth specially China in 2011. The online retailing is becoming an integral part of an economy and country and worldwide increasingly seeing trust and confidence in purchasing online. (AadWeening, 2012)

"E-commerce is benefiting from several positive trends, including the continued rollout of broadband, increasing user comfort shopping online and the decline of certain brick-and-mortar retailers," (Imran Khan, 2011, P.416 ).

Online consumers are always seeking new products, new attractiveness and the most important thing being price compatibility with their budget. The internet is the best way to save time and money through purchasing online within their range of budget at home or in anywhere. Online consumers don't have limits to online shopping. They also use internet for comparison of prices of goods and services, news, visit social networks and search information and so on. The recession has so much impact on online consumer behavior (Rodriguez, 2009, p. 3). Online shopping behavior depends on four factors such as Shopping motives, personality variables, internet knowledge and experience and last factor is shopping incentives.

These are key determinants to influence the behavior of online consumers. Online seekers are the main sources of online shopping. Online shoppers always want to seek information within few clicks and reach to the most relevant information according to their requirements such as competitive brands, best price offers, product specification and consumer word-of-mouth.

2.3.3 Consumer Behavior over Internet

According to Consumer Behavior Report, "One in four consumers indicated that they spend more time online because of the tough economy and 53 percent of consumers said they spend about the same amount of time online".

(Adapted from Price Grabber 2009 survey) Figure-3

According to PriceGrabber survey, consumers are divided by age wise and then take into account the online shopping to analysis the scenario. After survey it is clearly shown that older aged online consumers are totally different from younger online consumers. Why is it that? The answer is that older online consumers have the sense of saving and purchasing while younger online consumers have no experience and don't have enough maturity to buy goods with planned spending.

(Rodriguez, 2009). With the help of below table, it is clearly demonstrated.

Figure-4

(Adapted from Price Grabber 2009 Survey)

The online shopping trend around the world spread very fast. "The Neilson Company conducted a survey in 2010 and polled over 27,000 internet users in 55 market from Asia Pacific, Europe, Middle East, North America and South America to look at how consumers shop online" (Nielson, 2010). Globally online shopping is made on books and cloths as per survey data. Most people are interested to purchase and bought usually books and cloths. Airline tickets, books, tours and hotel reservations are also commonly bought through internet which indicates the progress and stability of economy.

2.4 Problems

There are billions of people online and each of them is potential online consumer for a company which providing online services and goods. Now a day, there are rapid and fast developments in information technologies industry. According to Keynote, "Online retail competition is heating up as consumer's behavior savvier on the Web". Competition increases day by day due to increase attention of consumers towards online shopping. The best retailer is based on their experiences on web. Online consumers also increase their expectations and they are set by their experience with online retailers across the Web. Brown says in his interview, "It is becoming increasingly imperative for retailers to provide a strongly positive online shopping experience".

It is very important to know that what kind of things and strategies help to increase sales in this fierce competition in market with high expectation of online consumers. "Our research shows that the sites that perform best in customer experience have a significant advantage in driving online sales."To enhance and attract online customer it is very important to know about their behavior and understand what they require and need. Since online shopping is the new medium of shopping with new demands of consumers. All customers have their own desires and demands for products so that it is very crucial for all online retailers to identify and know about their online consumers (Hasslinger, 2007, p.18).

Online shopping and online consumer behavior depend on these factors such as Website visibility, online shops credibility, information comparison, payment security, privacy, website interface, convenient time, education level and experience of network (Na Wang 1, 2008, p. 4). Culture, social, personal, psychological behavior also affects the consumer behavior in online shopping. Online shopping is based on individual to individual perceptions.

Consumer behavior in online shopping and in traditional shopping is very different. Both include social, cultural, personal and psychology etc. factors but traditional shopping is much more influenced by these factors as compared to online shopping. The reason is that online consumers are restricting with social cultural environment and psychological factors. Online shopping basically based on individual thinking point of view and his personal perceptions. Online shopping makes its own character for its development (Na Wang 1, 2008, p. 4).

The problem is that most of the online sellers don't know about the social and cultural norms about India and Indian consumer behavior as we have discussed above that consumer behavior is based on perceptions, its education, language, age, economic factor, income distribution, facility available in society and other factor as well which we will discuss in the light of the questionnaire. Therefore in this thesis, we will provide solution to online sellers in India to promote their goods and services in the light of consumer behavior theories with the help of survey.

Chapter III

Research Design

In this chapter, I'll present how I conducted the research to collect the primary data and reach to the conclusion of the research and will also explain which different types of methodology that were used.

The research is of deductive in nature and primary motive is to collect data and analyze it. By doing it, factors which influence online consumer behavior such as website quality, consumer concern in online shopping (Privacy, trust factor, delivery and return quality of goods and services) and consumer characteristics ( demographics, race, culture, technology awareness) will be derived. Then, we collect primary data with the help of survey. The main purpose of the survey was to collect data about online purchasing of in Gujarat. 3.1 Rationale:My research will focus on the Prospects of E-Retailing in the Indian market as it is the new form of retail which is flourishing very rapidly in Indian economy & it explores huge potential in the Indian market. Researching the Prospects of E-Retailing through their potential & different Problems faced by the Online Retailers & Customers will be the Prima Facie of the research to get the in depth about the Indian Ecommerce & Several factors affecting its growth.3.2 Objectives of the study:- Primary Objective:- Studying the Consumer Behavior towards E-Retailing in Gujarat.

Secondary Objectives:-

I. To get the In depth view of the Indian customers about the E-retailingII. Figuring out the Factors affecting the Indian customers which motivates them and restricts them from Online Shopping.

3.3 Research Purpose:

As said in the Introduction that due to increasing globalization; the importance of online business is increasing and making it more fast and convenient for consumers. So the research question of this study is how consumers behave while shopping online?

On the base of research question, the purpose of this research is to identify and get insight into consumer behavior towards online shopping with respect to India economy, Identify factors which influence online shopping and consumer behavior in Gujarat.

3.4 Choice of MethodologyThe main purpose of study was to study the consumer behavior who purchase from online in Gujarat with the help of internet. Online consumer behavior is influenced by many factors when making online purchase. In order to provide good piece of work and build understanding in this subject we conducted initial research in literature on consumer behavior and e-commerce. We have reviewed those theories and related studies that had similar areas to focus and give particular attention to their consequences.

For this research it is decided to use questionnaire approach that would be filled by people in Gujarat.This study is based on exploratory study but developed through exploratory study that's why research starts out with gaining knowledge regarding consumer behavior and then move towards online consumer behavior. With the help of this knowledge and theories it will identify those factors that are of importance when online consumer is making purchasing especially in Gujarat. Then this data used in order to find relationships, means, standard deviation and correlation between these variables.

3.5 Research ApproachThere are two types of research approaches commonly used, one is inductive approach and second one is deductive approach. In Inductive approach, the purpose of research would be to formulate a theory with the help of data while in deductive approach; the purpose of research would be to apply theory on gathered data (Saunders, 2003, p. 105). In inductive way theory would follow data vice versa as in deductive approach (Saunders, 2003, p. 106). In this research deductive approach was chosen for the study, research will find out online consumer behavior theories and factor affecting the online consumer's behavior in chapter 3 then in chapter 4 collected primary data is explained with questionnaire.

3.6 Research Strategy

There are two ways to collect data, when collecting data to approach the purpose of a research. Data collected from any sources that has been published already in any form is known as secondary data published research or printed material. Secondary Data already exists; it was gathered for previous purpose. It is not gathered for particular basis study; on the other hand, primary data is gathered for a particular research (Gilbert A Churchill, 2009, p. 142). Primary data can be collected through interviews, observations, experiments and questionnaire.

In research, the main concern is to collect primary data and analyze questionnaire and respondents in order to analyze factors involved in online shopping of electronic goods and how these are related to respondents. The primary data is conducted in a way that it will be able to approach the research and conclude answers to research questions. In Chapter 4, Questionnaire will be explained in more detail.

3.7 Sample Selection

The factor that intended to examine can be applied to and investigated in Gujarat population that uses the internet and buys goods. Since there are time and resource constraint that is why specific population had been approached in order to generalize the results includes 217 respondents71 were simply excluded from the research as the contacted persons have not used the internet for shopping and they have no knowledge or access to the online shopping so 146 Respondents are studied for analysis and research.

3.8 Type of Sampling

"Convenience sampling is the non-probability sampling techniques where subjects are selected because of their convenient accessibility and proximity to the research" (RESOURCES, 2012). It is the easiest way to analyze the data. In this method; specify number of sampled unit and don't concern with having numbers that matched the proportions in the population, this method is the nonprobability analogue of stratified random sampling in that it is important to assure that smaller group should accurately represented to sample taken (Base, 2006).Data is collected from as many respondents as possible but since the study is about Gujarat people so it is assumed that there will be little variation in population making it more approved generalized to the response rate. The sampling method for people took also place on a convenience basis since the people that agree to answer the questionnaire are those that were chosen.

3.9 Questionnaire format

In order to create questionnaire, the basis were built by deciding on the main variables that needed to be investigated. These were;

General Variable:

Demographics

Personal information

Social characteristics

Attitude towards online shopping

Identified Variables:

1. Consumer Behavior in Buying Process

Purchase Idea

Factors Influencing consumer behavior in purchase

2. Customer concern in online shopping

Pricing

Privacy & Security

Brand consciousness and trust

Delivery and Return Policy

The questionnaire was distributed to 146 educated individuals who are at least use to English language and confirmed to be regular or experienced users of the Internet. Three types of mechanism were practiced to send the questionnaire to respondents: emails, online link at Google docs and hand delivery. Subjects were requested to e-mail the filled questionnaire back to the researcher, go through the provided link of Google docs and submit or provide the hard copy filled questionnaire.

3.10 Research Hypothesis:Ho1: There is no significant difference between gender and attitude towards online shopping.

Ho2: There is no significant difference between age and attitude towards online shopping.

Ho3: There is no significant difference between Education and attitude towards online shopping.

3.11 Research Questionnaire

In the research questionnaire (Appendix 1), four main segments categorized as general demographics variables, identified variables, Indian consumers concern in online purchasing and post purchase behavior are highlighted through following such as;

1. Which gender is the most rely on the online shopping in Gujarat?

2. Which income class in more inclined toward online shopping in this State?

3. What is majority of consumers' level of education?

4. What factor consumer are preferring during online purchasing?

5. What Products they actually buy from online?

6. Are they inclined towards specific Retailer?

7. In what way they prefer to make the payment?

8. Which factors influence consumer behaviors in the process of purchasing?

9. What are the features that consumer concern towards online shopping?

10. Do consumers have fear towards online shopping and why?

3.12 Limitation

There are number of factors that affect the behavior of online consumers in India's market. But in this research, main focus is to study the behavior of the consumers in the process of purchasing from online stores. There are many theories and models that identify the consumer. This research is limiting itself on the scenario to identify consumer behavior variables in the buying process in Gujarat. Consumer behavior would be changed according kinds of goods and products. Therefore, different factors have different importance in the eye of consumer based on quality and kinds of goods. Therefore, this research limits itself only to consumer behavior in online shopping in Gujarat.

Chapter IV

Analysis & Interpretation

4.1 Results

In this chapter the results from the questionnaire and the distribution of collected data among the respondents has been discussed and presented.

The questionnaire was designed to collect the primary data and further on to analyse the data and how consumers behave against the importance of price, convenience, trust, loyalty when they purchase online. The questionnaire was divided to, first, the demographics segmentation among the respondents and second to, collect the data about the factors like price, convenience, brand consciousness, safety, trust which effect directly or indirectly to the decision making process and ultimately highlight the typical behavior of consumer while shopping online.

The questionnaire as you know divided into four main segments such as general, Consumer Behavior in Buying Process, Customer concern in online shopping and Experience. In general, we have received following responses such as;

4.2 SPSS AnalysisFactor AnalysisRotated Component Matrix

Component

123

It saves your time0.2560.7720.054

it takes more time to search specific product0.3650.7040.178

It gives me ease of shopping at home0.4230.8040.136

It does not require travelling to far off distance0.2350.7250.42

Speed of internet affects your online shopping0.1620.1880.782

It takes a long time to deliver products0.0940.1230.847

Shopping 24x70.8320.276-0.038

Ease to make payment assistance0.7670.3530.138

Lack of physical evidence affects my purchase decision0.7830.4130.03

I think that online shopping results in monetary benefits0.8520.2980.128

can customize the products according to my specification0.8260.220.273

get better discounts & offers on internet0.8580.2090.034

The actual products do no match the products shown on 0.7880.3320.182

Wide choices of brands to choose0.8490.2470.189

I do not get much variety in products0.2860.220.273

Interpretation: As we can see in the table, in the Factor 1, 3 items that are having max value shows the monetary benefits and wide variety of brands. So, this factor is labelled as Money & Assortment Benefits.On the Factor 2 Column, 3 items having max value above 0.5 shows time & convenience shopping. This factor is labelled as Efficient & Convenient BenefitsOn the Factor 3, 2 items showing that internet speed and long delivery time issues which are important. This factor is labelled as Connectivity & Delivery Issues

Gender Analysisgender * Consumer_behavior Cross tabulation

Consumer_behaviorTotal

shopDont shop online

gendermaleCount8540125

% within gender68.0%32.0%100.0%

% within Consumer_behavior58.2%56.3%57.6%

% of Total39.2%18.4%57.6%

femaleCount613192

% within gender66.3%33.7%100.0%


% of Total28.1%14.3%42.4%

TotalCount14671217

% within gender67.3%32.7%100.0%


% of Total67.3%32.7%100.0%

Chi-Square Tests

ValuedfAsymp. Sig. (2-sided)Exact Sig. (2-sided)Exact Sig. (1-sided)

Pearson Chi-Square.069a1.792

Continuity Correctionb.0141.907

Likelihood Ratio.0691.793

Fisher's Exact Test.884.453

Linear-by-Linear Association.0691.793

N of Valid Cases217

Interpretation: As we can see in the above tables, .453 > 0.05, so null hypothesis is not rejected and there is no significance difference between the gender & online shopping behavior.

Age Group AnalysisAge_Group * Consumer_Behavior Crosstabulation

Consumer_BehaviorTotal

shop onlinedon't shop online

Age_Group18-25Count12054174

% within Age_Group69.0%31.0%100.0%

% within Consumer_Behavior82.2%76.1%80.2%

% of Total55.3%24.9%80.2%

26-30Count14721



% of Total6.5%3.2%9.7%

31-35Count7512



% of Total3.2%2.3%5.5%

36 & aboveCount5510



% of Total2.3%2.3%4.6%

TotalCount14671217



% of Total67.3%32.7%100.0%

Chi-Square Tests

ValuedfAsymp. Sig. (2-sided)

Pearson Chi-Square2.021a3.568

Likelihood Ratio1.9223.589

Linear-by-Linear Association1.8911.169

N of Valid Cases217

Interpretation: As we can see in the above tables, .568 > 0.05, so null hypothesis is not rejected and there is no significance difference between the age & online shopping behavior. So there is no effect of age on the consumer behavior towards online shopping.

Education level AnalysisEducation * Consumer_Behavior Cross tabulation


Shop onlinedon't shop online

EducationPost GraduateCount7332105

% within Education69.5%30.5%100.0%


% of Total33.6%14.7%48.4%

GraduateCount622890



% of Total28.6%12.9%41.5%

MatriculationCount6511



% of Total2.8%2.3%5.1%

intermediateCount5611



% of Total2.3%2.8%5.1%

TotalCount14671217



% of Total67.3%32.7%100.0%

Chi-Square Tests

ValueDfAsymp. Sig. (2-sided)

Pearson Chi-Square3.537a3.316

Likelihood Ratio3.3303.343

Linear-by-Linear Association2.4331.119

N of Valid Cases217

Interpretation: As we can see in the above tables, .316 > 0.05, so null hypothesis is not rejected and there is no significance difference between the Education & online shopping behavior.

Income AnalysisIncome * Consumer_Behavior Cross tabulation


shop onlinedon't shop online

Incomeupto 15000Count291443

% within Income67.4%32.6%100.0%


% of Total13.4%6.5%19.8%

15000-25000Count8642128

% within Income67.2%32.8%100.0%


% of Total39.6%19.4%59.0%

25000 & aboveCount311546

% within Income67.4%32.6%100.0%


% of Total14.3%6.9%21.2%

TotalCount14671217

% within Income67.3%32.7%100.0%


% of Total67.3%32.7%100.0%

Chi-Square Tests

ValueDfAsymp. Sig. (2-sided)

Pearson Chi-Square.001a2.999

Likelihood Ratio.0012.999

Linear-by-Linear Association.0001.997

N of Valid Cases217

Interpretation: As we can see in the above tables, .999 > 0.05, so null hypothesis is not rejected and there is no significance difference between the Income & online shopping behavior.From this we can say that there is no effect of income on the consumer behavior towards online shopping.

Chart-1

Interpretation: From the above figure, we can easily analyze that majority of the males are respondents of the survey as compared to females, we have 58% of males and 42% percentage of females have participated in this survey. The survey was conducted in the cities of Gujarat.

Chart-2

Interpretation: From the figure named as age wise analysis, it is clear that in this survey we have age group of 18-25 with percentage 31% which is the highest percentage among other age distribution. In age distribution of 26-30 we have 28% and 23% fall in 31-35 age segment. So overall all the segments are actively engaged in online shooping.

Chart-3

Interpretation: The highest frequency 53% among the respondents falls under the category of PG level of studies followed by the 45% who has the Graduate degree. A very nominal percentage of almost 1% categorized in the matriculation and intermediate level of studies. This shows that online shopping behavior found mostly in educated class of peoples..

Chart-4

Interpretation: From the survey it was analysed that the highest frequency in income distribution fall between 15k to 25k category which are doing Post Graduation or joined the firms after graduation and after that both the other categories showing somewhat similar responses.

Chart-5

Interpretation: In this question, we get somewhat similar responses from our respondents and it is pretty hard to find the clear demarcation between the options. But we have got the majority of customers are purchasing frequently followed by those who are shopping half yearly. This clearly shows that the trend of online shopping frequency is on the move.

Chart-6

Interpretation: From the above figure, it is clear that from 39% of respondents have been doing online shopping from less than a year, it indicates that people in the cities are not addicted to online shopping and just currently involve in it. While 31% respondents have been doing online shopping since 1 to 3 years and 30% have been doing online shopping more than 3 years. In the next question survey it is analysed that what things people in Gujarat are buying from online source.

Chart-7

Interpretation: From the above chart, total 146 respondents who had made online purchasing out of which 28% respondents bought Mobiles & Electronic products. It is the highest frequency followed by clothes products & Books of 22% each. 20% customers are engaged in footwear shopping and the rest 8% are Music and software buyers.

Chart-8

Interpretation: In this question, we get the responses that Flipkart is the most preferred option for online shoppers with 28% followed by the others sites (i.e. Shopclues, Ebay, Indiatimes etc.) with 25%.Other solid online shopping players are Myntra, Snapdeal & Homeshop18 having the response of 20%, 14% & 13% respectively.

Chart-9

Interpretation: In this chart we can analyse different payment methods as being preferred by the online shoppers in Gujarat. Still COD i.e. Cash on Delivery holds the maximum response of 51% which shows that still in terms of payment, customers are hesitated towards the other payment mode & COD will remain favourite for Indian Customers on the whole. But due to the awareness and special offers, Debit/Credit card usage also increased as shown in the chart with 41% followed by Net banking having mere 8%.

Chart-10

Interpretation: This chart helps to show us the consumer behavior towards the various reasons which they are considering while shopping online.As we can see, most respondents have said that it is efficient way of shopping with 30% followed by 26% & 23% which are also very important reasons that why they are preferring to shop online with the reasons such as Saves Money & Time respectively.Other reasons with their values are shown in the chart.

Chart-11

Interpretation: Now this chart reflects the different features which are valued by the customers while shopping online. From the Graph, it is clear that all the factors are important in the mind of the customers but they mostly value the Company Profile & Brand identity having the highest value & Personalized offers as provided by the online retailers. Afterwards cost of delivery, Customer service & privacy protection are most important issues which are followed by others as shown.

Chart-12

Interpretation: This chart highlights the various factors which should be considered & taken well care of by the E-Retailers to ensure the overall good experience in the mind of the customers. This factors should be improved by the online retailers to nurture the loyalty of customers and provide impetus to them to go for online shopping.As we can see, Delivery on time is clearly the issue which should be focussed by the E-Retailers with 57% responses followed by after sales service & Packing of products with 21% & 14% respectively.

Chart-13

Interpretation: From the sample size of 217, 146 respondents are doing online shopping which shows that about 67% i.e. 2/3 of respondents are done online shopping in the past.From that 2/3 respondents, 95% of respondents are said that they will continue to shop online in the future.

Chart-14

Interpretation: Now in succession of the previous question, the remaining 5% which said that they wont shop online again in the future. This responses are backed by some barriers which have faced by those respondents which have created negative image of online shopping.Such barriers are shown above in the chart with Long Delivery time being the major barrier with highest value followed by Refund policy issues. Other factors such as Low Trustworthiness, Warranty claims, Bad customer service, Product failure to meet the expectations as being shown further aggregate to the woes of the customers.

Chapter V

Conclusion

5.1 ConclusionThis study was accomplished to determine the consumer behavior in Gujarat towards online shopping. Online shopping is increasing in India but acceleration of online shopping is not as rapid as compared to other developed countries like USA and UK. In research, online consumer behavior theories applied named as goal oriented online buyer and experimental motives of online shopping and highlighted into consumer characteristics, online consumer behavior, factor predicting online shopping and consumer mind-set in online shopping.

TAM (Technology Acceptance Model) and TRM (Theory of Reasoned Action) identifies factors such as internal beliefs, attitudes, and intention for online shopping; study revealed that online shopping is mostly influenced by social network/circles and personal experience. Consumers are doing online shopping because of convenience and time saving. "Search as recreation" mind set in is studied under experimental online shopping behavior.

The survey questionnaire was prepared and distributed among personal contacts and received 146 responses. The questionnaire format have three main segments such as general, identified variables then in last customer concern in online shopping. From the survey it is accessed that online shopping is more popular among the males as in Gujarat most online shopping was made by males with 58% and majority of the respondents were young; aged between 18 to 25 years old with 31% weightage and income distribution fell into range of 15k to 25k as lower middle class while majority of the respondent are educated and have done Post Graduation & graduation..

But the majority of Customers are not doing online shopping with 67% and those who are doing online shopping falls under the category of frequent buyer category who shop something within a month so it is evident that the trend of online shopping is becoming popular in the economy as whole.The online shopping is getting popular among the young generation as they feel it more Efficient, time saving and Money Saving. It is analysed from the survey that when a consumer makes a mind to purchase online, he or she is affected by multiple factors. The main crucial identified factors are time saving, the best price. The best price factor is popular among people because generally in online markets prices are lower as against the physical markets. . To purchase online things the customers still mainly prefers the Cash on Delivery method. The most preferred sites for the customers are Flipkart & Myntra due to their world class services on offerings.

The main barrier in the process of online shopping is the safety issue & Long Delivery time. Customers are afraid to share their personal information and financial information on internet due to which consumers are reluctant to make online purchasing and the waiting time also do the same, then second the most familiar barrier is the Refund Policy & thereafter Low trustworthiness on online stores therefore, sellers have to make proper strategies to increase the consumer's level of trust on them.

Chapter VI

Bibliography

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Chapter VII

APPENDIX

AnnexureName = 1. What is your Gender? a) Male b) Female2. Your Age? a) 18-25 b) 26-30 c) 31-35 d) 36 or more 3. What is your level of Education?a) Matriculation b) Intermediate c) Bachelors d) Masters or Above

4. What is your Monthly Income?a) > Rs 15,000 b) Rs. 15,000 to Rs. 25,000 c) Rs. 25,000 or more

5. How frequently do you Shop Online? a) Frequently (once a month) b) Once in six month c) Once a year

6. For how long have you been shopping online?a) Less than a year b) 1 to 3 years c) More than 3 years

7. What products do you normally shop online? (You can select more than 1) a) Books b) Mobile / Computer / Camera (Electronics Products)c) Clothesd) Music, Softwarese) Other (Please Specify)

8. Which Online Retailer do you prefer? (Rank according to preferences where 5 =Max & 1=Min)a) Flipkart___ b) Snapdeal___ c) Myntra___d) Homeshop18___e) Others ________________9. How do you make online payment while shopping?a) Debit/Credit Card b) Cash On Delivery c) Net banking d) Others

12345

Strongly

agreeAgreeCan't

sayDisagreeStrongly

Disagree

1.It saves your time

2.It does not require travelling to far off distance

3.It takes a long time to deliver products

4.It takes more time to search specific product

5.Speed of internet affects your online shopping

6.It gives me ease of shopping at home

7.Shopping 24x7

8.Ease to make payment assistance

9. get better discounts & offers on internet

10.do not think that online shopping results in monetary benefits

11. can customize the products according to my specification

12. Lack of physical evidence affects my purchase decision.

13.Wide choices of brands to choose

14. The actual products do no match the products shown on site.

15.I do not get much variety in products

11. Do you think the following need to be improved for e-commerce websites?

Strongly Agree Neutral Disagree Strongly Agree Disagree

After serviceWebsite security Delivery on time Packaging of products

12. Do you intend to continue purchasing products from the Internet in the near future?a) Yes b) No

13. If no, what reasons may cause you not to use the internet for shopping? (You can select more than 1)Low trustworthiness___Bad customer service___Product doesnt perform as expected___Long delivery time___High Shipping Cost___Refund Policy___Warranty and claims___

final mrp report

Documents

internet context

consumer commerce

consumer ecommerce

number of internet user

purchase products

process of consumer

online shopping

online purchasing