Post on 08-May-2015
transcript
1
A DISSERTATION REPORT
ON
“CONSUMER’S PERCEPTION ON ONLINE SHOPPING”
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ACKNOWLEDGEMENT
I would like to thank my batch incharge for extending
his helping hand towards this project and also assigning me the topic of “
Consumer Perception on Online Shopping” .
I would also like to express my gratitude to all the teaching faculty for giving
there valuable time for explaining all the topics clearly in a detailed manner.
Not to forget my friends and parents for their constant love and support.
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ABSTRACT
The growing use of Internet in India provides a developing prospect for online shopping.
If E-marketers know the factors affecting online Indian behavior, and the relationships
between these factors and the type of online buyers, and then they can further develop their
marketing strategies to convert potential customers into active ones, while retaining existent
online customers. This project is a part of study, and focuses on factors which online Indian
buyers keep in mind while shopping online.
This research found that information, perceived usefulness; ease of use; perceived enjoyment
and security/privacy are the five dominant factors, which influence consumer perceptions of
online purchasing.
A model was developed indicating online shopping behavior and acceptance among
customers in India. The model was tested with a survey sample (n=100). Factor analysis
technique in SPSS was used to classify these factors which buyers keep in mind while
shopping online.
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TABLE OF CONTENTS
ACKNOWLEDGEMENT
DECLARATION
ABSTRACT
1. INTRODUCTION 06-24
2. LITERATURE REVIEW 25-28
3. PROJECT PROFILE /OBJECTIVE 29-32
4. RESEARCH METHODOLOGY 33-41
5. DATA ANALYSIS 42-73
6. FINDINGS 74
7. GENERAL DISSCUSION 75-83
8. CONCLUSION 84-87
9. LIMITATION 88-91
10. RECOMMENDATION 92-97
11. EXECUTIVE SUMMARY 98-100
12. ANNEXURE 101-106
13. CONCLUSION 107-109
14. QUESTIONNAIRE 110-118
15. BIBILIOGRAPHY 119-120
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CHAPTER - 1
INTRODUCTION
1.0 INTRODUCTION
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Internet is changing the way consumers shop and buys goods and services, and has rapidly
evolved into a global phenomenon. Many companies have started using the Internet with the
aim of cutting marketing costs, thereby reducing the price of their products and services in
order to stay ahead in highly competitive markets. Companies also use the Internet to convey,
communicate and disseminate information, to sell the product, to take feed back and also to
conduct satisfaction surveys with customers.
Customers use the Internet not only to buy the product online, but also to compare prices,
product features and after sale service facilities they will receive if they purchase the product
from a particular store. Many experts are optimistic about the prospect of online business.
In addition to the tremendous potential of the E-commerce market, the Internet provides a
unique opportunity for companies to more efficiently reach existing and potential customers.
Although most of the revenue of online transactions comes from business-to-business
commerce, the practitioners of business-to-consumer commerce should not lose confidence.
It has been more than a decade since business-to-consumer E-commerce first evolved.
Scholars and practitioners of electronic commerce constantly strive to gain an improved
insight into consumer behavior in cyberspace. Along with the development of E-retailing,
researchers continue to explain E-consumers’ behavior from different perspectives. Many of
their studies have posited new emergent factors or assumptions that are based on the
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traditional models of consumer behavior, and then examine their validity in the Internet
context.
1.1 ONLINE SHOPPING IN INDIA
The birth and growth of Internet has been the biggest event of the century. E-commerce in
India has come a long way from a timid beginning in the 1999-2000 to a period where one
can sell and find all sorts of stuff from a high end product to a meager peanut online. Most
corporations are using Internet to represent their product range and services so that it is
accessible to the global market and to reach out to a larger range of their audience.
Computers and the Internet have completely changed the way one handles day-to-day
transactions; online shopping is one of them. The Internet has brought about sweeping
changes in the purchasing habits of the people. In the comfort of one's home, office or cyber
cafe or anywhere across the globe, one can log on and buy just about anything from apparel,
books, music and diamond jewellery to digital cameras, mobile phones, MP3 players, video
games, movie tickets, rail and air tickets. Ease, simplicity, convenience and security are the
key factors turning the users to buy online.
E-commerce revenues in the country are projected to reach Rs 2,300 crore in the year 2006-
07, growing at 95 per cent over 2004-05(Source: Internet and Mobile Association of India,
IAMAI). This pertains to the business-to-consumer (B2C) segment. It may be too early to do
a comparison with the e-commerce scenes in countries such as the US where billions of
dollars are spent online but the business in India is growing exponentially every year, albeit
from a smaller base, the total revenues have reached a respectful size.
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1.1.0 Recent Developments
The number of users logging on to the Internet is growing by leaps and bounds. The number
of Indians who are online is expected to touch to 100 million by 2007-08, from the present
38.5 million according to the research conducted by IAMAI. The numbers indicate a growing
sense of comfort with the use of Internet for shopping. Accompanying this growth, there is an
increasing maturity in the way people use the Internet. It's a classical curve. Online users
typically start by using e-mail, gradually move on to browsing for news, information and
entertainment, and finally graduate to shopping and conducting business online. Online sales
have registered a huge jump and what was a concept five years ago is now beginning to hit
the mainstream levels. Roughly 10 percent of the world's population more than 627 million
people have shopped online at least once, in India it is just
sprouted and beginning to perish. Internet is now going beyond the simple exchange of
information to a shopping paradise. This medium is far bigger than expected, but many
retailers and marketers are not using it to its full potential.
Indian customers are increasingly getting comfortable with online shopping, and there is a
higher acceptability for the concept. India has 25 million Internet users and more is now
turning to online shopping. There has been an influx of online shopping sites in India with
many companies hitching onto the Internet bandwagon. The revenues from online shopping
are expected to more than double by 2006-07. According to IAMAI, the average number of
transactions per month in India has gone up from 2 lakh in 2003-04 to 4.4 lakh in 2004-05
and has doubled to 7.95 lakh transactions per month in the year 2005-06. The online sales
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during the festival season had increased rapidly especially during Diwali and Ramzan which
recorded a sales of Rs115 crore, a 117 per cent increase from the Rs53 crore in the year 2004-
05(source IAMAI). These figures clearly show that online shopping has truly come of age
and consumers are keen to shop on the net. Effective customer communication on products
plus reduced shipping costs and timely delivery has helped online marketers to seize a slice
of the Rs 115 crore sales.
Online shopping has become the latest trend among shoppers. Indians are becoming more
comfortable with e-commerce. The consumer’s attitude has been evolving towards online
purchases. It has become increasingly positive over the years. The attitudes that drive people
to shop online, such as
convenience, price comparison and choice are improving tremendously in India.
Though a miniscule amount in the global context, the Indian online shoppers’ population
would make its presence felt quite remarkably. The potential of the Indian e-market can be
gauged from the fact that 16 percent of Indian consumers want to buy online in the next six
months, making it the third most online-potential country after Korea (28 percent) and
Australia (26 percent) (Source:IMRB). This is an indication of a growing breed of Indian
consumers who are not only better equipped but also more confident of the online
transactions. Indian businesses have also grown mature enough to move up the IT curve and
they are considering Business to consumer (B2C) e-commerce a viable revenue model. Some
of the companies that have benefited are baazee.com, indiatimes.com, rediff.com,
indiamart.com, fabmart.com, traveljini.com and sifymall.com.
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Indiamart.com has witnessed a growth of more than ten times in just two years in its online
gifts domain. In the online travel domain, the company was able to generate an average
$8,000 worth of room bookings/month for its premium client. It is expected to touch $15-
20,000/month/client by the year-end, which is over 100 percent growth (Source:Indiamart).
Brick-and-mortar businesses are also building up e-commerce revenues. In the year 2005-06
Samsung India recorded a 120 percent jump in online buying from its site over the year 2004-
05 (Source: Samsung). Nirula’s witnessed more than double growth in its B2C e-commerce
revenues in the year 2005-06 and is positive for the next one to two years (Source: Nirula’s).
Companies like eBay India have seen a large increase in the number of sellers and buyers
from B and C cities and in a year the eBay community (buyers and sellers) base has increased
to 1.7 million users, which shows that more Indians are shopping online (Source: eBay).
Online sales are currently marked by a single digit growth, but the leading garment retailers
like Pantaloon, Shoppers’ Stop and Globus have already made business strategies to enter
into the world of e-retailing. Famous apparel brand Zodiac has already started online stores.
The main motive of these retailers through online sales is to reach the global markets and the
small towns where they do not have the outlets. Thus the India's Internet shopping sector is
preparing for a massive growth, which is fuelled by increasing broadband usage and growing
e-commerce.
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1.1.1 Online Activities
The Internet has entered the mainstream consciousness over the past decade. This has
happened primarily because the web has got a graphical interface and Internet has moved
from governmental control to private hands. The activities which are happening on the
Internet are email and instant messaging, general web surfing or browsing, reading news,
hobby searches, entertainment searches, shopping and buying online, medical information
searches, travel information searches, tracking credit cards, and playing games.
Communication i.e. email, chat or instant message is the basic activity for which Internet is
used. It is the single most important reason for people to go online. E-mail provides the
opportunity to communicate more often with a much broader circle of people than one can
reach by telephone or by mail in a convenient way. In India too email constitutes the major
activity on the Internet. It was found that more elderly people are increasingly using email as
compared to the younger generations.
In India the top five online activities are e-mail, surfing, chatting, search and job search.
Some of the sites, which are commonly used for these particular activities, are:
Yahoo -Most preferred communication portal, tops for email and chat
Indiatimes –Best event and sports news provider.
Naukri-Best recruitment portal
Google-Best information domain
Shaadi-Best for matrimonial services
eBay-Best online shopping portal
(Source:IAMAI)
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In India online trading, travel, recruitment, ticketing, real estate, classifieds and social
networking are a few spheres ripe for investment.
1.1.2 Employment
Today online job search market is expanding tremendously. According to IAMAI the number
of online job seekers had reached 6.5 million in 2005-06 and is expected to across 9.2 million
in the year 2006-07. The market size of the Indian online recruitment industry in 2005-06 was
145 crore and it is estimated to reach Rs 241 crore for 2006-07 (source IAMAI) this is mainly
because of the increase in the internet penetration which has lead to an increase in the users
for whom net has become a convenient way to meet their needs. Every year thousands of
graduates pass out and look for employment opportunities, for these job seekers Internet is
the most convenient (24 hour a day) and the comprehensive medium to research and look for
jobs. Internet is advantageous to both the job seekers (saves time and cost) and to the
recruiters (easy access to the best talent pool) as a result there is a win a win situation.
1.1.3 Banking & Trading
The net banking is increasing and it is estimated that 4.6 million Internet users are using
Internet for banking purposes and it is expected to grow to 16 million plus by 2007-08
(Source IAMAI). Trading stocks is also becoming a fast booming activity amongst the
Indians. The traders feel that trading through Internet is not that cheap but the convenience
provided by online trading is worth the costs involved. Traders can keep a regular check on
various stocks and it is easier to compare them. They can not only buy and sell stocks but can
also find the track record of various stocks, do technical analysis, can access live news from
international news agencies such as Reuters, CNBC and can find opinions from other leading
brokers which help them do decide whether to buy or sell. More and more traders today are
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making the immense use of these services, which shows that there is a huge potential in this
sector.
1.1.4 Matrimonial
As the popular adage goes, "Marriages are made in heaven" but today with so many
matrimonial portals in the market they help one find the best match for themselves. Some of
the popular marriage portals are shaadi.com, bharatmatrimony.com, Yahoo India matrimony,
MrnMrs.com, Matricorp.com and jeevansaathi.com.
These marriage portals have increased because there is a rise in the career orientation among
youngsters and increasing work pressures have resulted in less time for socializing. These
youngsters are becoming more independent and are now making their own decision in respect
of choosing their life partners. The marriage portals provide them the medium to interact with
the people who match their required profiles. These portals not only help in finding a better
match but also provide with services of astrologers, decorators, wedding planners and
caterers thus providing a whole lot of services in one basket. More Indians are registering to
these matrimonial portals and there seems to be a huge growth in the coming years.
1.1.5 Online Ticketing
The growth in the online travel business today is phenomenal. The Indian online travel
business is worth $350-400 million and is growing at 40-50 per cent year by year, as the
online population of the country is estimated to be 25 millions (Source:IMRB). There has
been a significant increase in online ticket booking in India with a double-digit growth, which
has also lead to an increase in Indian tourism. This growth in the travel industry has definitely
leaded to the increase in the travel portals. The scope for growth is immense in this sector as
more Indians are using the Internet.
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Travel sites like MakeMyTrip.com (MMT) has been growing at about 20 per cent month-on-
month, for the last four months, selling 1,400 tickets a day on an average (Source:
MakeMyTrip.com). The online bookings in India was mainly stared because of the low cost
carriers like Air Deccan which sells most of it tickets online. The revenue of the Indian
Railway Catering and Tourism Corporation (IRCTC) has also increased phenomenally
because of the online ticketing. The advantages of online ticketing are both for providers and
for consumers as the providers benefit from infrastructure cost while for users it is a
convenient way to book tickets.
Thus Internet has become an indispensable part of life and has reduced the world to a global
village. Many corporates are getting into this bandwagon, as there seem to be a humongous
growth in the coming years. Airline, cinema, hotel bookings, etc are all increasingly going
online. The future of online business is bright therefore companies are providing more
convenient services to the consumers and thereby changing their mindsets and attitudes
towards life.
It is a fact that a great online shopping revolution is expected in India in the coming years.
There is a huge purchasing power of a youth population aged 18-40 in the urban area.
If we observe the growth of Indian online transactions (Info by: IAMAI), it is getting doubled
year by year.
The usage of internet in India is only 4% of the total population. This is also getting increased
day by day as the costs of computers are decreasing and net penetration is increasing. The
cost of internet usage is also getting lower, with good competition among the providers. Wi-
Fi & Wimax is also getting tested in Bangalore and other cities in India. This will increase the
usage as it goes more on wireless internet.
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Indians are proving every time that they can beat the world when it comes to figures of online
shopping. More and more Indians are going to online shopping and the frequency of India’s
online buying is crossing the overall global averages.
1.1.6 Factors That Boost Online Shopping in India
Rapid growth of cybercafés across India
Access to Information
The increase in number of computer users
Reach to net services through broadband
Middle-class population with spending power is growing. There are about 200 million
of middle-class population good spending powers. These people have very little time to spend
for shopping. Many of them have started to depend on internet to satisfy their shopping
desires.
1.1.7 Few Facts about Online Shopping
The figures from IAMAI show that the internet users in India will grow to 200 million by
2010. Around 25% of regular shoppers in India are in the 18-25 age groups, and 46% are in
the 26-35-year range.
Indian online matrimonial sector is worth around $230 million.
Worldwide e-commerce is only growing at the rate of 28%, since India being a
younger market, the growth of e-commerce is expected at 51% in the coming years.
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In line with global trends finally India has also started shopping online these days. As
per the study by IAMAI online shopping in India has rose from $11million in 1999-2000 to
$522 million in 2008 and it is expected to rise above $700 million by end March 2010.
Indians are also Shopaholics like other Asians. There is a strong booming young adult
population in India with good levels of disposable income.
In India
Over $50 Billion and growing rapidly - Most popular online shopping products include:
books (45%), electronic gadgets (42%), railway tickets (38%), accessories apparel (35%),
apparel (35%), gifts (34%), computer and peripherals (32%), airline tickets (28%), music
downloads (21%), movie downloads (21%), hotel rooms (22%), magazines (18%), tools
(16%), home appliances (16%), toys (16%), jewelry (17%), movie ticket (15%), etc.
Payments
Online shoppers commonly use a credit card to make payments, however some systems
enable users to create accounts and pay by alternative means, such as:
Billing to mobile phones and landlines
Cash on delivery (C.O.D., offered by very few online stores)
Cheque / Check
Debit card
Direct debit in some countries
Electronic money of various types
Gift cards
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Postal money order
Wire transfer /delivery on payment
Some sites will not accept international credit cards, some require both the purchaser's billing
address and shipping address to be in the same country in which site does its business, and
still other sites allow customers from anywhere to send gifts anywhere. The financial part of a
transaction might be processed in real time (for example, letting the consumer know their
credit card was declined before they log off), or might be done later as part of the fulfillment
process.
ADVANTAGES
Convenience
Online stores are usually available 24 hours a day, and many consumers have Internet access
both at work and at home. Other establishments such as internet cafes and schools provide
access as well. A visit to a conventional retail store requires travel and must take place during
business hours.
In the event of a problem with the item it is not what the consumer ordered, or it is not what
they expected—consumers are concerned with the ease with which they can return an item
for the correct one or for a refund. Consumers may need to contact the retailer, visit the post
office and pay return shipping, and then wait for a replacement or refund. Some online
companies have more generous return policies to compensate for the traditional advantage of
physical stores. For example, the online shoe retailer Zappos.com includes labels for free
return shipping, and does not charge a restocking fee, even for returns which are not the result
of merchant error. (Note: In the United Kingdom, online shops are prohibited from charging a
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restocking fee if the consumer cancels their order in accordance with the Consumer
Protection (Distance Selling) Act 2000).
Information and reviews
Online stores must describe products for sale with text, photos, and multimedia files, whereas
in a physical retail store, the actual product and the manufacturer's packaging will be
available for direct inspection (which might involve a test drive, fitting, or other
experimentation).
Some online stores provide or link to supplemental product information, such as instructions,
safety procedures, demonstrations, or manufacturer specifications. Some provide background
information, advice, or how-to guides designed to help consumers decide which product to
buy.
Some stores even allow customers to comment or rate their items. There are also dedicated
review sites that host user reviews for different products. Reviews and now blogs gives
customers the option of shopping cheaper org anise purchases from all over the world without
having to depend on local retailers.
In a conventional retail store, clerks are generally available to answer questions. Some online
stores have real-time chat features, but most rely on e-mail or phone calls to handle customer
questions.
Price and selection
One advantage of shopping online is being able to quickly seek out deals for items or services
with many different vendors (though some local search engines do exist to help consumers
locate products for sale in nearby stores). Search engines, online price comparison services
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and discovery shopping engines can be used to look up sellers of a particular product or
service.
Shipping costs (if applicable) reduce the price advantage of online merchandise, though
depending on the jurisdiction, a lack of sales tax may compensate for this.
Shipping a small number of items, especially from another country, is much more expensive
than making the larger shipments bricks-and-mortar retailers order. Some retailers (especially
those selling small, high-value items like electronics) offer free shipping on sufficiently large
orders.
Another major advantage for retailers is the ability to rapidly switch suppliers and vendors
without disrupting users' shopping experience..
DISADVANTAGES
Fraud and security concerns
Given the lack of ability to inspect merchandise before purchase, consumers are at higher risk
of fraud on the part of the merchant than in a physical store. Merchants also risk fraudulent
purchases using stolen credit cards or fraudulent repudiation of the online purchase. With a
warehouse instead of a retail storefront, merchants face less risk from physical theft.
Secure Sockets Layer (SSL) encryption has generally solved the problem of credit card
numbers being intercepted in transit between the consumer and the merchant. Identity theft is
still a concern for consumers when hackers break into a merchant's web site and steal names,
addresses and credit card numbers. A number of high-profile break-ins in the 2000s has
prompted some U.S. states to require disclosure to consumers when this happens. Computer
security has thus become a major concern for merchants and e-commerce service providers,
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who deploy countermeasures such as firewalls and anti-virus software to protect their
networks.
Phishing is another danger, where consumers are fooled into thinking they are dealing with a
reputable retailer, when they have actually been manipulated into feeding private information
to a system operated by a malicious party. Denial of service attacks are a minor risk for
merchants, as are server and network outages.
Quality seals can be placed on the Shop web page if it has undergone an independent
assessment and meets all requirements of the company issuing the seal. The purpose of these
seals is to increase the confidence of the online shoppers; the existence of many different
seals, or seals unfamiliar to consumers, may foil this effort to a certain extent. A number of
resources offer advice on how consumers can protect themselves when using online retailer
services. These include:
Sticking with known stores, or attempting to find independent consumer reviews of
their experiences; also ensuring that there is comprehensive contact information on
the website before using the service, and noting if the retailer has enrolled in
industry oversight programs such as trust mark or trust seal.
Before buying from a new company, evaluate the website by considering issues such
as: the professionalism and user-friendliness of the site; whether or not the company
lists a telephone number and/or street address along with e-contact information;
whether a fair and reasonable refund and return policy is clearly stated; and whether
there are hidden price inflators, such as excessive shipping and handling charges.
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Ensuring that the retailer has an acceptable privacy policy posted. For example note
if the retailer does not explicitly state that it will not share private information with
others without consent.
Ensuring that the vendor address is protected with SSL (see above) when entering
credit card information. If it does the address on the credit card information entry
screen will start with "HTTPS".
Using strong passwords, without personal information. Another option is a "pass
phrase," which might be something along the lines: "I shop 4 good a buy!!" These are
difficult to hack, and provides a variety of upper, lower, and special characters and
could be site specific and easy to remember.
Although the benefits of online shopping are considerable, when the process goes poorly it
can create a thorny situation. A few problems that shoppers potentially face include identity
theft, faulty products, and the accumulation of spyware. Whenever you purchase a product,
you are going to be required to put in your credit card information and billing/shipping
address. If the website is not secure a customers information can be accessible to anyone who
knows how to obtain it. Most large online corporations are inventing new ways to make fraud
more difficult, however, the criminals are constantly responding to these developments with
new ways to manipulate the system. Even though these efforts are making it easier to protect
yourself online, it is a constant fight to maintain the lead. It is advisable to be aware of the
most current technology and scams out there to fully protect yourself and your finances.One
of the hardest areas to deal with in online shopping is the delivery of the products. Most
companies offer shipping insurance in case the product is lost or damaged; however, if the
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buyer opts not to purchase insurance on their products, they are generally out of luck. Some
shipping companies will offer refunds or compensation for the damage, but it is up to their
discretion if this will happen. It is important to realize that once the product leaves the hands
of the seller, they have no responsibility (provided the product is what the buyer ordered and
is in the specified condition).
Lack of full cost disclosure
The lack of full disclosure with regards to the total cost of purchase is one of the concerns of
online shopping. While it may be easy to compare the base price of an item online, it may not
be easy to see the total cost up front as additional fees such as shipping are often not be
visible until the final step in the checkout process. The problem is especially evident with
cross-border purchases, where the cost indicated at the final checkout screen may not include
additional fees that must be paid upon delivery such as duties and brokerage. Some services
such as the Canadian based Wishabi attempts to include estimates of these additional cost,[but
nevertheless, the lack of general full cost disclosure remains a concern.
Privacy
Privacy of personal information is a significant issue for some consumers. Different legal
jurisdictions have different laws concerning consumer privacy, and different levels of
enforcement. Many consumers wish to avoid spam and telemarketing which could result
from supplying contact information to an online merchant. In response, many merchants
promise not to use consumer information for these purposes, or provide a mechanism to opt-
out of such contacts.
Many websites keep track of consumers shopping habits in order to suggest items and other
websites to view. Brick-and-mortar stores also collect consumer information. Some ask for
address and phone number at checkout, though consumers may refuse to provide it. Many
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larger stores use the address information encoded on consumers' credit cards (often without
their knowledge) to add them to a catalog mailing list. This information is obviously not
accessible to the merchant when paying in cash.
Hands-on inspection
Typically, only simple pictures and or descriptions of the item are all a customer can rely on
when shopping on online stores. If the customer does not have prior exposure to the item's
handling qualities, they will not have a full understanding of the item they are buying.
However, Written and Video Reviews are readily available from consumers who have
purchased similar items in the past. These can be helpful for prospective customers, but these
reviews can be sometimes subjective and based on personal preferences that may not reflect
end-user satisfaction once the item has been received.
Because of this, many consumers have begun going to real-world stores to view a product,
before purchasing online. To combat the process, Target has requested distributors give them
equally low prices, or alternatively, exclusive products available at their store only
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CHAPTER - 2
LITERATURE REVIEW
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2.0 LITERATURE REVIEW
The current literature on consumer online purchasing decisions has mainly concentrated on
identifying the factors which affect the willingness of consumers to engage in Internet
shopping. In the domain of consumer behavior research, there are general models of buying
behavior that depict the process which consumers use in making a purchase decision. These
models are very important to marketers as they have the ability to explain and predict
consumers’ purchase behavior.
The classic consumer purchasing decision-making theory can be characterized as a
continuum extending from routine problem-solving behaviors, through to limited problem-
solving behaviors and then towards extensive problem-solving behaviors [Schiff man et al.,
2001].
The traditional framework for analysis of the buyer decision process is a five-step model.
Given the model, the consumer progresses firstly from a state of felt deprivation (problem
recognition), to the search for information on problem solutions. The information gathered
provides the basis for the evaluation of alternatives. Finally, post-purchase behavior is critical
in the marketing perspective, as it eventually affects consumers’ perception of
satisfaction/dissatisfaction with the product/service.
This classic five stage model comprises the essence of consumer behavior under most
contexts. Nevertheless, the management of marketing issues at each stage in the virtual
environment has to be resolved by individual E-marketers. Peterson et al. [1997] commented
that it is an early stage in Internet development in terms of building an appropriate dedicated
model of consumer buying behavior. Decision sequences will be influenced by the starting
point of the consumer, the relevant market structures and the characteristics of the product in
question. Consumers' attitude towards online shopping is a prominent factor affecting actual
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buying behavior. (Source: Jarvenpaa Journal of Electronic Commerce Research, VOL. 6, and
NO.2, 2005)
Todd [1997] proposed a model of attitudes and shopping intention towards Internet shopping
in general. The model included several indicators, belonging to four major categories; the
value of the product, the shopping experience, the quality of service offered by the website
and the risk perceptions of Internet retail shopping. In the research conducted by Vellido et
al. [2000], nine factors associated with users' perception of online shopping were extracted.
Among those factors the risk perception of users was demonstrated to be the main
discriminator between people buying online and people not buying online.
Other discriminating factors were; control over, and convenience of, the shopping process,
affordability of merchandise, customer service and ease of use of the shopping site. In
another study, Jarvenpaa et al. [2000] tested a model of consumer attitude towards specific
webbase stores, in which perceptions of the store's reputation and size were assumed to affect
consumer trust of the retailer. The level of trust was positively related to the attitude toward
the store, and inversely related to the perception of the risks involved in buying from that
store. Jarvenpaa et al. [2000] concluded that the attitude and the risk perception affected the
consumer's intention to buy from the store.
Consumer risk perceptions and concerns regarding online shopping are mainly related to
aspects involving the privacy and security of personal information, the security of online
transaction systems and the uncertainty of product quality. Trust is interwoven with risk
[McAllister, 1995]. One of the consequences of trust is that it reduces the consumer’s
perception of risk associated with opportunistic behavior by the seller [Ganesan, 1994]. Lack
of trust is frequently reported as the reason for consumers not purchasing from Internet shops,
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as trust is regarded as an important factor under conditions of uncertainty and risk in
traditional theories.
Mayer et al. [1995] developed a model which combines traditional marketing philosophy on
consumer motivation to buy and the trust model. In this model, trust propensity; which is a
personality trait possessed by buyers; is an important antecedent of trust. In Internet
shopping, there is not much information available to the buyer regarding the seller, prior to
purchase. A buyer with a high propensity to trust will more likely be a potential customer
than a buyer with a lower propensity. Mayer et al. [1995] proposed that ability, benevolence
and integrity constitute the main elements of trustworthiness. Ability refers to skills,
competencies and characteristics that a seller has in a specific domain. In this context, sellers
need to convince buyers of the competence of their companies in the Internet shopping
business. Benevolence is the extent to which the seller is perceived by the buyer as wanting
to ‘do well’. Sellers have to convince buyers that they genuinely want to do good things for
buyers, rather than just maximize profit.
28
CHAPTER - 3
PROJECT PROFILE/
OBJECTIVES
29
3.0 PROJECT PROFILE
3.1 Objective of the Study
The objective of this research study is to investigate online consumer behavior, which in turn
provides E-marketers with a constructional framework for fine-tuning their E-businesses’
strategies. The specific objectives of this research are:
1. To know the consumers awareness and perception about the products and services
provided on internet.
2. To know how it provides products and services and satisfies their customers.
3. To know how it reduc\es the uncertainty in purchase decision process.
3.2 Scope of the Study
1. The Study was conducted among the Internet users.
2. The Geographical area covered was Sec-18 Noida, Sec-29 Noida,
3. The Study was based on a Schedule of Questions.
4. The scope of internet shopping
It was a time of past to spared your business in market by conventional methods. Old
market is today converted in high tech markets. Today if you want to purchase any
item from abroad you need not to go or you need not to call them for a sample. You
can find their products and see the catalogue on internet. Internet enables you to shop
throughout world from the comfort of your home. Internet has some special
characteristics which no other medium have. Only internet can provide you such
special information even no salesman can help you as internet helps. Countless people
can see products at a single movement, as well as they can purchase the product same
30
time. You can compare various product and choose which is more useful for you, You
have the facility to visit websites as much as you like no restriction on you here you
will find approximately all world class brands and their products you have the facility
to compare them, arrange according to many types like by price, by size, by category,
by most salable item and many more. This facility enables you to choose. This way of
shopping provides a new way of shopping. You get to identify the products, compare
the prices and quality and view the products from different angles. Testimonials and
reviews are the unique feature of shopping where you can share your experiences with
other users/consumers. The most exciting aspect of internet shopping is that it is a
24x7 affair! And youre free to shop on your leisure hours and even holiday are useful
for shopping for you. Your time is best valued here. You need not to go market so no
tension of conveyance, pollution, traffic etc.
The other dimension is that you directly purchase the items from original merchant in
online shopping no mediator comes between you and merchant so it becomes cheaper
to purchase item. Fewer mediators less price. Merchant will also save his money by
selling of goods on internet. merchant need not to spent for staff, showroom, other
shop expenses. He can sale by less resources and less expenses, some online store do
not have their physical showroom they display their product and services online and
deliver goods on customer 's door such merchant save a lot of expenses and they work
in less capital thats why they are able to sale goods on low prices.
Internet has a very bright future. If you want to increase your business and cross the
boundaries of region you need to take help of internet. Without going online you cant
think about your progress worldwide. In this regard you can see all large scale
business. Big brand, big shopping store are online. Online shopping is the demand of
todays modern time. Time and quality is the main subject of online shopping. Today
31
everybody is running to save time and who saves time automatically save money. Day
to day needed item is now available on internet and people prefer to shop online. Not
only for progress but also to survive in this competition era business internet help.
Are you looking for the fastest website for online shopping at low price branded
products than http://www.shoppingsnooper.com/ is the one name in one of the fastest
and largest shopping search engine. Here you can search every type of products at
competitive prices. Visit http://www.shoppingsnooper.com/ to see the unbeatable
speed of searching.
3.4 Rationale of Study
Selling on internet has a large potential due to the very high targeting possibilities As a result
of this exceptional development, the online selling industry is becoming interested in the use
of internet to reach their customers. Hence a better understanding of online shopping is
critical to the effective use of this channel of approach to the consumer. It is especially
important to know what is the consumer’s perception towards online shopping, benefits
perceived by them and what factors attract them towards online shopping.
32
CHAPTER - 4
RESEARCH METHODOLOGY
33
4.0 RESEARCH METHODOLOGY
4.1 Research Objective
To know and understand the consumer’s perception and awareness about internet marketing/
shopping. This will help to know the attitude and perception of consumers towards online
shopping and what are the factors which shape the consumer’s perception towards online
shopping. Also what are key concerns from the point of view of consumer while online
shopping.
4.2 Determination of information needs and sources
The following was the information required:
What is consumer’s attitude towards online shopping?
What are the key concern areas for consumers while online shopping?
Which factors shape the consumer’s attitude towards online shopping?
How has been recent shift taking place in online shopping?
4.3 Research Framework
Eleven different factors were identified by studying the existing models of consumer
attitudes(Refer Annexure 1, 2) that play an important role in online purchase, then a model
was proposed leading to online shopping.
The data was collected only through Questionnaires. The sample size was 100. And random
sampling was done among the internet users.
34
4.3.1 Proposed Model
After examining the 10 empirical studies, we identify a total of eleven interrelated factors for
which the empirical evidences show significant relationships. These ten factors are perceived
usefulness, perceived ease of use, perceived enjoyment, information on online shopping,
security and privacy, quality of internet connection, attitude towards online shopping,
intention to shop online, online shopping decision making, online purchasing, and consumer
satisfaction.
Six (perceived usefulness, perceived ease of use, perceived enjoyment, information on online
shopping, security and privacy, quality of internet connection )are found to be ordinarily
independent and five (attitude toward online shopping, intention to shop online, decision
making, online purchasing, and consumer satisfaction) are ordinarily dependent variables.
Consumer satisfaction is considered to be a separate factor in this study. It can occur at all
possible stages depending on consumer’s involvement during the online shopping process.
The relationships between satisfaction, attitude, intention, decision making and online
purchasing are proposed to be two-way relationships due to the reciprocal influences of each
on the other. In addition, three of the antecedents, perceived usefulness, perceived ease of
use, perceived enjoyment , have been found to have direct impact on consumer satisfaction.
Perceived Usefulness
Perceived usefulness is defined as the degree to which a person believes that using a
particular system would increase his or her job performance. It is an important factor
affecting acceptance of an information system, because the ultimate aim of any person is the
superior job performance.
35
Perceived Ease of Use
This is an important factor that affects the acceptance of a particular information system. It is
defined as the degree to which a person believes that using a particular information system
would be free of effort. Hence an application perceived to be easier to use would more likely
be accepted by the user.
Perceived Enjoyment
Enjoyment refers to the extent to which the activity of using a computer is perceived to be
enjoyable in its own rights. This is seen as an intrinsic source of motivation to use a particular
application.
Amount of Information
Amount of information is defined as the information which is available for the product which
a person wants to buy through online shopping. This factor eases the decision of the user to
actually buy the product or not, or which product to buy. This factor becomes even more
important in case of High Involvement product.
Security and Privacy
Security and privacy are the main factors which hinder the growth of online shopping. The
user is concerned about his ID and Password which can be stolen by persons with wrong
intentions and then misuse it. At the same time they are concerned that their personal
information may be sold to the third party which poses a serious threat to their privacy.
36
Quality of Internet Connection
Not only is the presence of internet connection necessary but also its Quality is important to
shop online. This is an important factor which determines whether the user would shop online
or not because presence of internet is a basic necessity for this mode of shopping
Attitude and perception towards online shopping
Consumer’s attitude and perception toward online shopping have gained a great deal of
attention in the empirical literature. It is believed that consumer attitudes will affect intention
to shop online and eventually whether a transaction is made. It refers to:-
1) The consumer’s acceptance of the Internet as a shopping channel
2) Consumer attitudes toward a specific Internet store (i.e., to what extent consumers think
that shopping at this store is appealing).
Intention to shop online
Consumer’s intention to shop online refers to their willingness to make purchases in an
Internet store. Commonly, this factor is measured by consumer’s willingness to buy and to
return for additional purchases. The latter also contributes to customer loyalty. Consumer’s
intention to shop online is positively associated with attitude towards Internet buying, and
influences their decision-making and purchasing behavior. In addition, there is evidence of
reciprocal influence between intention to shop online and customer satisfaction.
Online shopping decision making
Online shopping decision-making includes information seeking, comparison of alternatives,
and choice making. The results bearing on this factor directly influence consumer’s
37
purchasing behavior. In addition, there appears to be an impact on user’s satisfaction. Though
it is important, there are only five studies that include it.
According to Haubl and Trifts (2000), potential consumers appear to use a two-stage process
in reaching purchase decisions.
Initially, consumers typically screen a large set of products in order to identify a subset of
promising alternatives that appears to meet their needs. They then evaluate the subset in
greater depth, performing relative comparisons across products based on some desirable
attributes and make a purchase decision.
Online purchasing
This is the most substantial step in online shopping activities, with most empirical research
using measures of frequency (or number) of purchases and value of online purchases as
measures of online purchasing; other less commonly used measures are unplanned purchases
Online purchasing is reported to be strongly associated with the factors of personal
characteristics, vendor/service/product characteristics, website quality, attitudes toward
online shopping, intention to shop online, and decision making (Andrade 2000; Bellman et al.
1999)
Consumer satisfaction
It can be defined as the extent to which consumer’s perceptions of the online shopping
experience confirm their expectations. Most consumers form expectations of the product,
vendor, service, and quality of the website that they patronize before engaging in online
shopping activities.
38
These expectations influence their attitudes and intentions to shop at a certain Internet store,
and consequently their decision-making processes and purchasing behavior. If expectations
are met, customers achieve a high degree of satisfaction, which influences their online
shopping attitudes, intentions, decisions, and purchasing activity positively. In contrast,
dissatisfaction is negatively associated with these four variables (Ho and Wu 1999; Jahng et
al. 2001; Kim et al. 2001).
4.4 Data Collection Method-
4.4.1 Primary Data
It is original primary data, for specific purpose of research project. For this project, I have to
use following common research instrument or tool-
Questionnaire-
Information on online shopping
Security & Privacy
Perceived Usefulness
Perceived Ease of use
Attitude towards online shopping
Intention to shop online
Decision Making
Online Purchase
CONSUMER SATISFACTION
Perceived Enjoyment
39
Questionnaire development is the critical part of primary data collection method. For this I
will prepare a questionnaire in such a way that it will be able to collect all relevant
information regarding the project. The questionnaire was designed using various scaling
techniques. The questionnaire was used mainly to test the model proposed for consumer
perception towards online shopping. Likert five point scales ranging from Strongly Agree to
strongly disagree was used as a basis of Questions. The data collection was done over a
period of 8 weeks
This was done by going directly to the respondents or through mails.
4.4.2 Secondary Data
It will be collected to add the value to the primary data. This may be used to collect necessary
data and records by different websites, magazines, annual reports, journals, reference books,
and newspapers, etc.
4.5 Sample Design
4.5.1 Sample Unit
For studying consumer perception on online shopping, samples were selected from noida ncr.
4.5.2 Sample Media
The respondents in the samples are reached through personal interviews.
4.5.3 Sampling Methods
Sampling methods fall under two broad categories-
40
a) Non-probability sampling methods.
b) Probability sampling methods.
4.5.4 Sample size- 100
4.5.5 Research place- NCR region
4.5.6 Sample Design
I have prepared this project as descriptive type, as the objective of the study.
41
CHAPTER - 5
DATA ANALYSIS
42
5.0 DATA ANALYSIS
The objectives of the research were studied with respect to a regular online shopper who
shopped more than once because they would be the right respondent to give an insight about
the online shopping. Therefore it is firstly important to understand who is a regular online
shopper. In the survey the respondents where asked the following questions which helped to
know about a regular shopper.
1) FOR FACTORS AFFECTING ONLINE SHOPPING
Respondents were asked to rate the factors influencing online shopping purchase behavior. In
all six different factors were taken in questionnaire for getting the responses of
consumers .Here are those factors:
Information about online products and services
Perceived usefulness
Ease of use
Perceived enjoyment
Security
Quality of internet
Factor analysis was done using SPSS to extract the most important benefits derived by
customers’ point of view from the usage of online shopping.
43
RESULTS OF FACTOR ANALYSIS
KMO AND BARTLETT'S TEST
Kaiser-Meyer-Olkin Measure of
Sampling Adequacy..667
Bartlett's Test of
Sphericity
Approx. Chi-
Square83.193
df 15
Sig. .000
Communalities
Initial Extraction
Information1.000 .572
Percieved
usefulness 1.000 .675
Ease of use1.000 .763
Percieved
enjoyment1.000 .812
Security1.000 .260
44
Quality of internet
connection1.000 .673
Extraction Method: Principal Component Analysis.
Total Variance Explained
Compo
nent
Initial Eigenvalues
Extraction Sums of
Squared Loadings
Rotation Sums of Squared
Loadings
Total
% of
Varianc
e
Cumulat
ive % Total
% of
Varianc
e
Cumulat
ive % Total
% of
Varianc
e
Cumulat
ive %
1 2.571 42.853 42.853 2.571 42.853 42.853 2.417 40.276 40.276
2 1.184 19.732 72.584 1.184 19.732 72.584 1.338 22.308 72.584
3 .970 16.162 78.746
4 .695 11.592 90.338
5 .350 5.840 96.178
6 .229 3.822 100.000
Extraction Method: Principal Component Analysis.
45
46
Component Matrix (a)
Component
1 2
Information.563 .505
Percieved
usefulness .797 .201
Ease of use.836 -.253
Percieved
enjoyment .886 -.166
Security.365 -.355
Quality of internet
connection.054 .819
Extraction Method: Principal Component Analysis.
a 2 components extracted.
47
Rotated Component Matrix(a)
Component
1 2
Information.362 .664
Percieved
usefulness .684 .456
Ease of use.873 .040
Percieved
enjoyment .890 .139
Security.463 -.213
Quality of internet
connection-.222 .790
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a Rotation converged in 3 iterations.
48
Component Transformation Matrix
Componen
t 1 2
1 .943 .334
2 -.334 .943
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
Interpretation:
The value of KMO test is coming out to be 0.667, which suggests the validity for factor
analysis.
The principal component analysis is giving 72.584 as commutative % which is good enough
because data redundancy is less. Two components have been extracted with Eigen values
more than 1 after principal component analysis and rotated component analysis.
The output value shows that following factors can be safely extracted after factor analysis:
Information about online products and services(Extracted from component 2)
Perceived usefulness (Extracted from component 1)
Ease of use(Extracted from component 1)
Perceived enjoyment(Extracted from component 1)
49
2) FOR FACTORS CONCERNING ONLINE SHOPPING
Respondents were asked to rate the factors of concern for online shopping purchase
behaviour.In all six different factors were taken in questionnaire for getting the responses of
consumers .Here are those factors:
Not sure of product quality
Cannot bargain/negotiate
Not sure of security of transactions/credit card misuse
Need to touch and feel the product
Significant discounts are not there
Have to wait for delivery
50
Total Variance Explained
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings Rotation Sums of Squared Loadings
Total
% of
Variance
Cumulative
% Total
% of
Variance
Cumulative
% Total % of Variance Cumulative %
1 2.437 40.625 40.625 2.437 40.625 40.625 2.418 40.292 40.292
2 1.226 20.428 61.052 1.226 20.428 61.052 1.221 20.357 60.649
3 1.021 17.013 78.065 1.021 17.013 78.065 1.045 17.416 78.065
4 .809 13.491 91.556
5 .507 8.444 100.000
6 -2.182E-
16-3.636E-15 100.000
Extraction Method: Principal Component
Analysis.
51
RESULTS OF FACTOR ANALYSIS
Component Matrixa
Component
1 2 3
not sure of product quality .964 -.004 .055
cannot bargain/negotiate -.161 -.721 .235
not sure of security of
transactions/credit card mis use.964 -.004 .055
need to touch and feel the
product.145 .211 .933
significant discounts are not
there-.024 .796 -.092
have to wait for delivery .728 -.165 -.284
Extraction Method: Principal Component Analysis.
a. 3 components extracted.
Rotated Component Matrixa
Component
1 2 3
not sure of product quality .953 .050 .152
cannot bargain/negotiate-.115
-.765.059
not sure of security of
transactions/credit card mis use.953 .050 .152
need to touch and feel the
product.046 .010 .966
significant discounts are not
there-.087 .793 .077
have to wait for delivery .762 -.048 -.236
52
Component Matrixa
Component
1 2 3
not sure of product quality .964 -.004 .055
cannot bargain/negotiate -.161 -.721 .235
not sure of security of
transactions/credit card mis use.964 -.004 .055
need to touch and feel the
product.145 .211 .933
significant discounts are not
there-.024 .796 -.092
have to wait for delivery .728 -.165 -.284
Extraction Method: Principal Component Analysis.
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 4 iterations.
Component Transformation Matrix
Compon
ent 1 2 3
1 .992 .069 .103
2 -.089 .973 .213
3 -.085 -.220 .972
Extraction Method: Principal Component
Analysis.
Rotation Method: Varimax with Kaiser
Normalization.
53
54
INTERPRETATION:
The principal component analysis is giving 78.065 as commutative % which is good enough
because data redundancy is less.
Three components have been extracted with eigen values more than 1 after principal
component analysis and rotated component analysis.
The output value shows that following factors can be safely extracted after factor analysis:
Not sure of product quality (Extracted from component 1)
Transactions/credit card misuse (Extracted from component 1)
Have to wait for delivery (Extracted from component 1)
Significant discounts are not there (Extracted from component 2
55
I Have you purchased anything online ever?
Fig. 1 Total Purchase Online
The research showed that 65% of the Internet users had shopped online while 35% had not
bought anything. This is mainly because of the changing lifestyle and taste patterns. As the
life is getting more and more fast paced more people are moving on to shop online mainly
because of convenience. This shows that a more Internet users are using it as a shopping
medium and there is a huge potential in this sector but one should not be carried away by this
figures. There could be a possibility that only a small section of the online shoppers are
shopping or only a particular category of good had brought about this huge number. As a
result the entire analysis was done in case of a regular online shopper to understand the
shopping behavior of the online shoppers.
The following question helped to understand who is a regular online shopper among the 65%
who had indulged into online shopping.
NO35%
YES 65%
56
II How frequently did you purchase online?
Fig. 2 Frequency of Online Purchase
12%
74%
5%9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Only Once 2-4 times 5-6 times More than 6times
This helped to understand the purchasing behavior of the online shoppers. It was seen that
14% of the online shoppers had shopped more than five times and 74% had shopped 2-4
times. The frequency shows the acceptance of Internet as a shopping medium. Though only a
small amount of the online shoppers had purchased more than 6 times but still there is a huge
opportunity in the Internet arena. The 65% of the online shoppers who had shopped more
than once were considered as regular shopper and the entire analysis was based on these
regular shoppers.
57
5.1 The Internet Usage
It is necessary to study the amount of time spend by the regular shoppers on the world wide
web because this would give us clear picture as to understand whether usage and time spent
by the regular online shoppers has an effect on online shopping or not.
Fig. 3 Online Shopping & Internet usage by years
2%6%
14%
78%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Lessthan1year
1–3years 3–5years More than5years
The diagram shows that shopping has increased with the usage of Internet over the years.
Regular shoppers who have been using Internet for more than one year had shopped to 98%
and regular shoppers who have been using Internet for more than five years have shopped to
78%. Internet is not a new concept for these regular online shoppers and they have been using
it for more than 5 years now. The increased usage over the years has lead to an increase in
shopping, as these regular shoppers are able to make use of the various e-commerce
activities.
58
Fig. 4 Online Shopping & Internet usage by hours a week
4%
12%
20%
28%
36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 - 5hours a
week
6 - 10hours a
week
11 - 15hours a
week
16 - 20hours a
week
Morethan 20hours aweek
The research shows that 36% of the online shopping had been done who use Internet for more
than 20 hours a week and 96% of the shopping has been done by regular shoppers who have
been using Internet for more than 5 hours a week. As more the regular online shopper are
using the Internet it is seen that they end up buying more also. This shows that Internet is
becoming an integral part of the daily activity of the regular online shopper. The regular
online shoppers who have been using Internet for more than 20 hours are more comfortable
and confident as a result they purchase more online as compared to who use Internet for less
number of hours. The study shows that the growing usage of Internet has lead to increase in
online shopping as seen above. There is a positive relation between increase usage of Internet
and online purchase. The marketers should capture this enormous growth, which can be
brought by the penetration of broadband and lowering the prices of computers. Thus increase
in usage of Internet over the years and the more time spent has lead to an increase in
shopping. But one needs to know whether online shopping is an integral part of regular
shoppers or not this understood as follows.
59
5.2 The web online activity
The following classifications are done to study the online activities in case of a regular online
shopper.
Fig. 5 Online Activities
10%
Shopping20%
Finance
14%
Entertainment
24%
Inf ormation
Gathering
32%
Communication
The Internet offers four basic services communication (socializing service with peer group or
core group (email) or with new groups of people (chat), information services, entertainment
services and commerce services and shopping. The research shows 32% of the regular online
shoppers use Internet for communication while only 10% uses it for shopping which shows
that communication still forms the major activity among the regular online shoppers.
60
Fig. 6 Online Activities by Age
0%
10%
20%
30%
40%
50%
60%
70%
communication Informationgathering
Finance Shopping
18-30 years
31-40 years
41-50 years
above 50years
This classification further provides an insight that Internet is mainly used as a means of
communication in respect all the age groups of the regular online shoppers. It contributes to
60% of the major activity among the regular online shoppers who lie between the age group
18-30 years. It could be seen that shopping as a basic activity on the Internet contributes to
the minimum. Internet as a medium of shopping is maximum used by regular online shoppers
between the age group18-30 years, which is 18% while above 50 years it is used just to 2%.
The increase in usage among the 18-30 years is basically due to high awareness. The
marketers should focus mainly on the age group between 18-30, as they are the main drivers
for growth. Thus the research shows that though the regular shoppers are using the Internet
for quiet some time now but shopping still remains a small part of the major activity
61
Fig. 7 Online Activities by Time
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0-5 hours 6-10 hours 11-15hours
16-20hours
more than20 hours
Communication
Information
Entertainment
Finance
Shopping
It is evident that regular online shoppers also spend a major part of their time in
communication unlike the occasional online buyers. In 0-5 hours a week they spend 77% of
their time in communication, which includes email, and chat as the major activity with
shopping which does not seem to exist at all. Information search constitute 20% of the time.
The information search increases as the regular online shoppers tries to figure out ways to
surf the Internet and access the information they require. It is true that more regular online
shoppers use Internet shopping sites to gather information about products rather than to make
a direct purchase.
But it is to be noticed that as the time spend increases communication falls and other activity
picks up like entertainment and finance. One could see from the graph that between 16-20
hours a week communication falls further but information search also falls as the regular
online shoppers becomes more focused in their information search rather than wandering
aimlessly in the Internet space. They continuously use search engines for routine information
needs. The time spent on entertainment increases marginally to 18%. As the people spend
more time it has been seen that activities like shopping and finance related needs increases.
62
The regular online shoppers who use the Internet for more than 20 hours a week has shown
that they have indulged into more shopping i.e.10%. It is true that as the regular online
shoppers spends more time on the Internet there is a possibility that they would end up
buying more as they are ease with the use of internet. Increased usage of Internet is positively
related to the buying behavior on the Internet.
Analysis-
It is true that increase in internet has lead to an increase in the online shopping as 78% of the
online shopping has been done by the regular online shopper who have been using internet
for more than five years and 36% of the online shopping have been done among the regular
shopper who uses the Internet for more than 20 hours a week. Thus increase in usage of
Internet has lead to an increase in online shopping. But shopping still constitute a small
amount of the major activity on the internet as 32% of the regular online shoppers uses
Internet for communication while only 10% uses it for shopping. Communication still
constitutes the major activity on the Internet.
5.3 Demographic Factors
Online behavior is affected by demographics i.e. by gender, education and income.
5.3.1 Hypotesis
1. More male Internet users are frequent online buyers than female Internet users.
2. Regular online buyers are better educated than occasional online buyers.
3. Income is higher in case of a regular online shopper than occasional online buyer.
63
Fig. 8 Online Shopping & Gender
28%Female
72%Male
Among the 65% of the online shopping, males (72%)had purchased more as compared to
women (28%). This shows that it is true that more males are shopping online as compared to
women. This is mainly because women still like to feel, see and touch the product before
buying. It was noticed that some of them felt shopping as a reason to go out with the family
and spend time together, which was not possible in case of online shopping. As more and
more Indian women are flocking to Internet there is a possibility that they might end up in a
purchase. Also an increase in the spending power in the hands of the women might lead to an
increase in the online shopping. The research showed that 28% of the women who shopped
online fall mostly in the service and executive class with an income above Rs10,000. The
marketers should make sure that they produce the item keeping in mind the needs of the
women population as they still continue to be an important decision maker when shopping for
the family.
64
Fig. 9 Online Shopping & Educational Qualification
3%
Non
Matriculate
8%
Matriculate
54%
Postgraduate
35%
Graduate
Educational difference is a significant demographic variable, which shows that regular
shoppers who were better educated made more purchases online. 89% of the shopping has
been done by the regular shopper whose is educated with a graduate or postgraduate degree.
This shows that frequency of purchase is more in case of a higher educated regular shopper as
compared to a online shopping done by a regular online shopper with matriculate (8%) and
non matriculate (3%).
65
Fig. 10 Online Shopping & Income
1 2 1 13
5
1 1
8
21
53
14
38
15
11
0
5
10
15
20
25
30
35
40
Student Service/Executive Business Others
less5000
5000-10000
10000-25000
above25000
Income and buying behavior are positively related. It was seen that a regular online shopper
with a higher income had purchased more online as compared to lower income online
shopper. This trend was seen in all segment of the population. It is true that more the income
in the hands of the population they would indulge in shopping. The service class had done the
major purchase in all the various levels of income. It can be seen that hardly any purchase is
done among the regular online shopper whose income lies below Rs5000.
Analysis-
Thus three hypotheses stated were true in case of the regular online shopper and it can
interpreted that online shopping is effected by demographics like gender, education and
income levels. Among the 65% of the online shopping, males (72%)had purchased as
compared to women (28%). There is a positive relation between education and income of the
online shoppers. 89% of the online shopping was done among the regular shoppers who were
educated with a graduate or postgraduate degree compared to 11% shopping who were
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matriculate and non-matriculate. A 60% of the shopping was done by the regular shopper
who had income more than Rs 25,000 than 40% who had income less than Rs.25,000.
5.4 Motivating & Satisfaction Factors
To identify the factors which Internet users choose to buy or not buy online and how
frequently they make such purchases. Analyzing the importance of satisfaction level in the
online purchasing environment.
5.4.1 Hypothesis
Consumers who make frequent online purchases are higher in convenience orientation than
those who purchase occasionally.
Fig. 11 Online Shopping & Motivating Factors
32%
Convenience
23%
Price
12%
Superior
selection
26%
Saves Time
7%
Product
Comparison
It is believed that consumers whether online shoppers or non-online shoppers value price to
convenience but the study contrast this popular belief. The study showed that 32% of the
shopping had been done by the regular shopper who think convenience is the main driving
force while 23% of the shopping had been done for whom price was the main orientation for
shopping online. Other motivating forces, which had lead to online shopping, were saves time
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(26%), product availability and superior selection (12%), and product comparison (7%).
Convenience here is characterized as ease of purchase, home delivery and ability to shop
24x7. These factors motivate the regular online shopper to buy over the Internet and regular
online shoppers who value convenience are more likely to buy on the web, as compared to
occasional online shoppers. Every connection is a potential for net shopping. Therefore the
companies should attract and retain its regular online shoppers, as the Internet is a tangled
jungle of web sites, which is possible at a click of a mouse. They should design strategies and
develop products keeping in mind the convenience factors.
Fig. 12 Barriers to Shopping Online
7%
Others9%
Unfamiliar
14%
Hassle of
returning
16%
Lack of
Customer
Service
21%
Inability to
touch & feel
33%
Privacy &
Security
The main areas for concern in respect of the regular online shoppers while shopping were
privacy and security (33%). Most of them still preferred the conventional method of shopping
like the touch and the feel factor (21%). They felt that it is possible to see, feel, touch and try
the products before buying in a shopping store as compared to Internet shopping. Other
reasons that concern the regular online shoppers were inability to reach the customer service
(16%), hassle of returning the product (14%), technical foul –ups, hesitant in purchasing from
an unfamiliar source and person and delivery costs. The marketers should formulate such
strategies so that the privacy and security concern can be taken care off.
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Fig. 13 Convenience- The Motivating Factor
12%
74%
5%9%
5%
20%
27%
48%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Only once 2-4 times More than5 times
More than6 times
purchase
convenience
It has been seen that there is a positive correlation between the frequency of purchase and the
convenience factor for buying in the Internet arena. The regular online shopper who had
purchased more than 6 times (9%) for them convenience is the most important motivating
factor (48%)for shopping on the Internet. Convenience has been characterized as ease of
purchase, home delivery and ability to shop 24x7. The online shopper believes that large
amount of information about the product and the ability to compare prices is available at a
click of a mouse thus making the entire shopping experience very convenient. Thus the
marketers to should keep the convenience factor in mind while providing the goods and
services.
5.4.2 Satisfaction Index
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It is important to understand the satisfaction level among the regular online shoppers, which
had lead to online shopping. This could be understood by the satisfaction index and the
frequency of purchase among the shoppers.
Fig. 14 Satisfaction Index
2%
Highly Satisfied
12%Dissatisfied
31%Neither
Satified nor Dissatisfied
55%Satisfied
A 55% of the regular online shoppers were satisfied with 12% dissatisfied. An important
thing to be noted is that only 2% of the regular online shoppers were highly satisfied while
31% of the regular online shoppers were neither satisfied nor dissatisfied. This shows
satisfaction level plays an important role in online shopping with more regular shoppers
falling under the category of satisfied. This shows that they were overall satisfied by the
experience of shopping online. But the companies should take measures so that the
dissatisfied and the neither satisfied nor dissatisfied category of regular online shoppers could
be moved to satisfied or highly satisfied. A note should be taken that only 2% of the regular
online shoppers are highly satisfied which shows that there are still concerns, which poise the
regular shoppers from using the Internet frequently as a shopping medium.
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Satisfaction level can also be measured by the frequency with which the online shoppers
purchase online. According to human psychology it is true that frequency of purchase
depends upon the satisfaction level received. According to the figure 2 (already explained), a
74% of the regular online shopper has purchased 2-4 times and 9% had purchased more than
6 times indicating that an increase in the confidence level and accepting the Internet as a
shopping medium. The increase in the frequency of shopping was mainly because they were
overall satisfied by the entire shopping experience.
Analysis-
It is seen that the main orientation for buying among the regular online shoppers were
convenience (32%), saves time (26%), price (23%), product availability and superior
selection (12%), and product comparison (7%). The hypothesis stated that convenience is
major factor motivating the regular shopper was true as 75% of the regular online shoppers
who have shopped more than 5 times felt it was necessary as compared to 25% who shopped
less than 5 times.
The barriers to online shopping as stated by the regular online shopper were privacy and
security (33%), inability to touch and feel the product (21%), customer service problems
(16%), hassle of returning the product (14%), purchasing from unfamiliar source and person
(9%) and other problems (7%).
Satisfaction level plays an important role in online shopping, as 55% of the regular online
shoppers that are satisfied tend to purchase more. It can also be seen that 74% have shopped
more 2-4 times and 11% had shopped more than 5 times showing that satisfaction level plays
an important role in online shopping.
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5.5 Future and growth of Online Shopping
This can be understood by the categories of good bought by the regular online shoppers
presently and the future of the various categories.
Fig. 15 Present & future categories of Goods
0%
20%
40%
60%
80%
100%
120%
Books Railwaytickets
Airlinetickets
ElectronicGadgets
Gifts Moviestickets
Present Future
It is seen that railway tickets 70% and airline tickets 93% are the most popular categories
among the online shoppers followed by books and electronic gadgets. This is the main
category, which is bringing about online shopping culture among the regular online shoppers.
The companies should bring out innovative ways so that there is a growth in other categories
of goods also. The entire shopping culture among the regular shoppers is brought mainly by
the travel categories followed by electronic gadgets. The graph shows that online shopping is
tend to grow in the coming years as consumers want to buy more in the future.
Table 1 Future Categories of Goods
Railway tickets 83%
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Airline tickets 80%
Electronic Gadgets 50%
Books 43%
Gifts 33%
Movies tickets 30%
Jewellery 23%
Computer Software 20%
Hotel Rooms/Car Rental 20%
Event Tickets 13%
Toys 13%
Infant / Child items 10%
Food / Groceries 7%
Accessories apparel 3%
CD/Videos 3%
Magazines 3%
Home tools and products 3%
Sporting goods 3%
The table I shows that shows that there is a future growth in the electronic gadget and book
categories also apart from railway and airline tickets, which continues to be on the priority
list. There is a growth in these categories because traditionally products like audio-video,
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apparel, and computer accessories were purchased through catalogs and other forms of direct
mail but toady online shopping serves a convenient means of distribution channel. Another
reason for the growth in these categories is because of well-established sites for travel, audio-
video (e.g., CD-Now), and computers (e.g.www.dell.com, www.sonyvaio.com), which lure
the consumers to buy these products. These goods do well because consumers are not
bothered much about the touch and feel factors, which generally drive the shopping in India
unlike categories like apparels and groceries where it still remain an important factor while
purchasing. It is difficult to change the set mindset of consumers for certain categories of
goods but still companies should keep innovating and find means and ways to attract more
online shopping.
Analysis-
There is a future growth in online shopping which can be especially seen in the travel arena
with railway 83% and airlines 80%, electronic gadgets (50%)and books (43%). Gifts also
seem to show a growth in the coming years. Thus the marketers should mainly focus on these
growing categories of goods, which would drive the online shopping in the future.
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CHAPTER - 6
FINDINGS
75
6.0 FINDINGS
The findings show that Internet usage has increased over the years and it is leading to an
increase in online shopping and also shows the consumers attitude and perception towards
online shopping. Communication still forms the major activity among the large number of
online shoppers as 32% of regular online shopper use Internet for communication as
compared to shopping (10%).
Online shopping is affected by demographics as it has been seen that more males are
shopping online as compared women online shoppers and there is a positive relation between
education and income levels with respect to the increased online shopping behaviour.
The most important motivating factor, which influenced the online shopping, was
convenience followed by time saving and price. Regular online shoppers considered
convenience as the main motivating factor while buying and were less price sensitive. But the
online marketers should attempt to differentiate their products or services making the
comparison easier. The marketers should bring out innovative ways so that the consumers can
do more online shopping while taking the full advantage of rich information, easy access and
convenience of the Internet.
One of the main concerns among the online shoppers was privacy and security. Another
reason that hindered online shopping was the touch factor. Consumers still preferred the
experience they get from traditional stores like feeling the store’s atmosphere, interacting
with a salesperson, and seeking sensory stimulation. This might hinder the use of certain
goods like grocery and apparel, as the touch factor is the main factor, which drives the
shopping for these goods. The future of online shopping is bright especially in the categories
of travel, books, electronic gadgets and gifts.
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CHAPTER - 7
GENERAL DISSCUSIONS
77
7.0 GENERAL DISCUSSION
7.1 Indian E-Comm. Report Finds Heavy Spenders Driving Sales
By Devin Comiskey
August 16, 2008
A Survey by Indian research organization Juxtconsult found that more and more Indian
Internet users are opening their wallets online. While such hurdles as limited broadband
access and security concerns remain, the report finds there are currently more than 10 million
shoppers online in India. While current trends point to increased e-commerce growth in India,
the online marketplace in the country of more than 1 billion people is still relatively small.
Juxtconsult's survey found that 40 percent of all urban Internet users buy online, while 42
percent of the sales originate through just five percent of consumers. The survey was
conducted in April 2008and sampled more than 30,000 users.
"This section of buyers spends 5,000 rupees or more per month on the net," states the report.
"It is interesting to note that two out of every three heavy spenders are also 'netholics,' those
who are on the net for more than three hours per day...Of all those who buy online, only 25
percent are spending more than 1,000 rupees per month while the (remaining) 75 percent bill
less than 1,000 rupees per month." (1,000 Indian rupees is currently equal to approximately
$23 US.)
The report also found that buying and search patterns among Indians differ between genders.
"While 43 percent of male users buy online, only 31 percent of urban female users are
consumers as well. Women tend to search more. Defying their more common attitude
towards shopping, women are more guarded when it comes to the online market," says
Juxtconsult.
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"Depending on the product type, nine percent to 25 percent are buying online, whereas 33 to
47 percent are searching the net for product information," it says.
7.2 Security Fears Persist
Juxtconsult says the motivation for Indian users to make purchases online varies, but users
fear compromised personal information is still a great risk when it comes to e-commerce.
"The single biggest motivation for buying online for net users is saving time. Thirty-two
percent of them look to shop online with this purpose. Convenience of shopping '24x7' and
home delivery are other major incentives," says the report. "However, the concern of possible
misuse of credit card or personal information is extremely significant among online buyers,
with almost 55 percent of them voicing their concern. Clearly, tackling and countering the
issue of online safety figures as an imminent challenge for net marketers."
7.3 Books, CDs Top the List
The products that are purchased most online in India, according to Juxtconsult, are books and
CDs - making up 25 percent of all online purchases.
"Ironically, computer hardware and software, despite having the home advantage are among
one of the least bought products online, with only 13 percent buying them," says the report.
"In sum, the online market in India is blossoming but is yet to take off in a considerable way.
The Internet is still being used more for searching than buying products and services. Though
a noticeable proportion of net users are also net consumers, essentially, at present only a
small tribe among them is driving online shopping momentum," says Juxtconsult.
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LATEST
A new trend in this space is that of Meta search engines. Ixigo and Ezeego are two
players in this space. A Meta search engine searches all the online travel sites (including the
airlines sites as well) and displays the best deals for the user.
Travel websites, such as Make My Trip India Pvt. Ltd and Yatra Online Pvt. Ltd, are
battling to win over India’s Rs16,000 crore ($400 million) religious travel market
Opportunity in Online Travel Industry: $2billion
Online travel company MakeMyTrip (MMT) has recorded sales of Rs. 1000 crore for
the financial year ending March 2008, as per a release
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CHANGING ATTITUDE TOWARDS ONLINE SHOPPING:
Malls malls springing up everywhere and yet people are e-shopping! And not in small
numbers either. E-commerce figures are going through the roof, according to Assocham
(Associated Chambers of Commerce & Industry of India). Today (2008-09) the figures are
touching Rs. 2200 crore, but are expected to increase by 150 percent by 2009-10 - to Rs
5,500 crores! And two metros - Delhi and Mumbai are driving the growth:
LOGGING ONTO E-SALES
CITY Share in 08-09 Projection for 09-10
Mumbai 24% 40%
Delhi 20% 30%
Chennai 7% 11-12%
Kolkata 7% 10-11%
Bangalore 6% 9%
It was never thought that Indians would go in for e-shopping in such a big way. Ticketing,
travel bookings and even books and movies seem fine to buy online. Knowing that in India
sizes vary from brand to brand and quality is inconsistent, even of some electronic items, how
is it that there are people buying these items online?
Well, Assocham says that books are the hottest selling item on the internet. In fact most
products bought and sold off online are: books, electronic gadgets and railway tickets.
However, people are also buying clothes; gifts, computer and peripherals, and a few are
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buying home tools and products, home appliances, toys, jewelry, beauty products and health
and fitness products.
Traffic for e-commerce sites is mostly coming from the two metros of Delhi and Mumbai.
Here are few reasons for this:
1. Convenience
It is the major reason. Both the cities are spread out over a large area and the best stores
in both these cities are often concentrated in certain ‘posh’ areas. In Mumbai for
example there are certain items you get only in Crawford market which is at the other
end of town in South Mumbai. And demographics show that the population of Mumbai
is now concentrated in the suburbs. Of course, huge malls have come up in the suburbs
as well, and India’s biggest mall Nirmal Lifestyle is in far-flung Mulund but often you
find a better choice of sizes and styles choice in other malls, say Phoenix (central
Mumbai). And though both Mumbai and Delhi have transport system, few people like
to travel for two hours just to get to a shop at the other end of town. Clearly the
transport systems leave much to be desired. In Delhi, safety is also an issue for women
traveling alone in the evenings.
2. Literacy Rate and the Cities’ Internet Savvy Population
Most cities in India have a higher literacy rate as compared to the national average of
64.8 percent. In fact Mumbai has a highest literacy even amongst the cities (86 per
cent). Delhi too has a high literate population (81.2 per cent). Oddly, although
Bangalore has a higher literacy rate than Delhi, at 83 per cent, the city’s share of e-
commerce is not very high. Kolkatta too has a literacy rate (80.8 per cent) and so does
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Chennai (80.1 percent.) If one compares these rates to literacy rates of cities like Patna
(62.9 percent), Jaipur (67 percent), Indore (72 percent) or Warangal (73 percent) its
clear why its the metros which are going to continue to lead e-shopping.
3 .Home delivery concept
In any case, home delivery is a concept that Indians are familiar with and love. The mall
craze has started only now. Earlier it was a choice between sweating it out in small crowded
markets, or asking a friendly neighbourhood kirana (grocer) to deliver groceries home and
this system is still thriving.
4. Increase in the Internet users
Increasing penetration of Internet connectivity and PCs has led to an increase in the Internet
users across India. The demographic segments that have witnessed maximum growth
comprise college going students and young persons. These segments are the users of
advanced applications and technologies online and are most likely to be heavy E-Commerce
users.
4. Increase in the number of buyers and sellers
The success of a marketplace depends on the presence of a large number of buyers and
a large number of sellers. In addition to online buyers, many offline stores have begun
to sell their products in the online marketplace. The greater the number of sellers and
buyers, the faster the market grows.
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PRODUCT PREFERENCES CITY WISE
Bangalore loves to buy books, electronic gadgets, computer peripherals, gifts movies,
bookings, actually just about everything.
Well, Kolkatta prefers to buy music and movies online
Mumbai leads in all categories, except jewellery.
Delhites seem to prefer buying jewellery online as compared to any other city
Indian E-Comm. Report Finds Heavy Spenders Driving Sales
By Devin Comiskey
August 16, 2008
A Survey by Indian research organization Juxtconsult found that more and more Indian
Internet users are opening their wallets online. While such hurdles as limited broadband
access and security concerns remain, the report finds there are currently more than 10 million
shoppers online in India. While current trends point to increased e-commerce growth in India,
the online marketplace in the country of more than 1 billion people is still relatively small.
Juxtconsult's survey found that 40 percent of all urban Internet users buy online, while 42
percent of the sales originate through just five percent of consumers. The survey was
conducted in April 2008and sampled more than 30,000 users.
"This section of buyers spends 5,000 rupees or more per month on the net," states the report.
"It is interesting to note that two out of every three heavy spenders are also 'netholics,' those
who are on the net for more than three hours per day...Of all those who buy online, only 25
percent are spending more than 1,000 rupees per month while the (remaining) 75 percent bill
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less than 1,000 rupees per month." (1,000 Indian rupees is currently equal to approximately
$23 US.)
The report also found that buying and search patterns among Indians differ between genders.
"While 43 percent of male users buy online, only 31 percent of urban female users are
consumers as well. Women tend to search more. Defying their more common attitude
towards shopping, women are more guarded when it comes to the online market," says
Juxtconsult.
"Depending on the product type, nine percent to 25 percent are buying online, whereas 33 to 47
percent are searching the net for product information," it says
85
CHAPTER - 8
CONCLUSION
86
8.0 CONCLUSION
The e-commerce is one of the biggest things that have taken the business by a storm. It is
creating an entire new economy, which has a huge potential and is fundamentally changing
the way businesses are done. It is believed that electronic commerce will become a huge
industry in the coming years and online shopping is now becoming a significant part of the
consumers daily life to meet their never ending requirements in a convenient way.
Online shopping is picking up and is becoming a trend. More consumers are indulging into
Internet shopping as seen by the research because of the value proposition it offers to a
customer such as convenience, 24x7 shopping, doorstop delivery, a broad product selection
and the ever-expanding range of unique and unusual gift ideas as well as increased consumer
confidence in shopping on the internet is increasing. The main motivating factor seen during
the research was the convenience and customer service which drives the people to online
shopping as a result today they are buying airline and railway tickets, books, home
appliances, electronic gadgets, movie tickets, etc by logging on to a web site, than driving up
to a store .As the research suggest that increase in usage of internet increases the online
shopping so there is a need to increase in broadband penetration as it accelerates the growth
of online trade. A huge buyers and sellers across demographics are shopping online because
of the changing lifestyles and shopping habits but the majority of the users are males. It was
seen that despite the immense possibilities available on the Internet it is mainly used for
mailing, chatting and surfing. E-mail applications still constitute the bulk of net traffic in the
country.
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Increased Internet penetration, a hassle free shopping environment and high levels of Net
savviness see more and more Indians shopping online.
8.1 Barriers to the Growth of Online Market
8.1.1 Consumer Bias
Consumers often display a bias for brands that they know well and have had a good
experience in the past. Thus products of brands with a favorable bias will score over the
products of less popular brands. A few would risk buying expensive jewelry from an
unknown jeweler online.
8.1.2 Lack of ‘Touch –Feel-Try’ Experience
The customer is not sure of the quality of the product unless it is delivered to him and post
delivery of the product, it is sometimes a lengthy process to get a faulty or the unsuitable
product changed. Thus, unless the deliverables are as per the customers expectations, it is
hard to infuse more credibility in the e-Tailing market.
8.1.3 Mounting Competitive Pressures
To attract customers, the competing online players are adopting all means to provide products
and services at the lowest prices. This has resulted in making the consumers choice-spoilt,
who in turn surf various websites to spot the lowest price for the product. Thus, although the
number of transactions is increasing, the value of the products sold is continuously falling
owning to high competition and leaner margins.
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8.1.4 Seasonality
E-Tailing Market is faced by seasonal fluctuations. As told by an Industry player, “August to
February is the peak seasons for sale, while March to July is the dry seasons for sale”. During
the peak season, occasions that drive the sales are Diwali, Rakhi, Valentines Day, New Year,
Christmas, Mother’s Day, Friendship Day etc are. On these occasions younger generations
prefers buying and sending gifts online.
8.1.5 Credibility in Payment System
Online frauds and breach are the biggest barriers to online sales. As a result, prospective
buyers prefer staying away from revealing their credit card and bank details.
8.1.6 Untimely Delivery of Products
It might take a few minutes to search, book and pay for products and services online, but the
delivery of the product may take unreasonable time.
It is a challenge for E-marketers to convert low frequency online buyers into regular buyers
through successful website design and by addressing concerns about reliable performance.
Thus, the online retailing raises more issues than the benefits it currently offers.
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CHAPTER - 9
LIMITATION
90
9.0 LIMITATION
Every study will have its problems and limitations at some point during the project. This
study is no different. The use of a non-probalistic sample in the research was a major
limitation because there was no way to make sure that the sample taken represented the total
population of the Internet users. A non-probability sample lacks the accuracy and precision
that a probability sample might offer. Though this samples provided a better insight about the
online shoppers but there could be a possibility that a respondent may have done online
shopping but is not a regular Internet user. It was seen that some respondents were biased
towards some questions. Another major limitation encountered doing the research assignment
was the issue regarding the time.
Limitation of the study is the selection of the existing studies. Owing to time limitation, only
a few number of journals were searched. This may leave some other prominent empirical
studies out. In addition, owing to the multidisciplinary nature of online shopping, it would be
very interesting to compare IS literature to other disciplines that study online shopping
attitudes and behavior.
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LIMITATIONS, PERILS AND DANGERS OF ONLINE SHOPPING
Scams and internet fraud is no more news in the internet world. Scammers have gone deep
online. Millions of dollars are reported every day of the year to be lost by innocent souls.
Men and women are duped online every day without any form of comfort in their lives. Since
the internet is for all and sundry, excessive exposure to it could be dangerous and risky. The
problem with online shopping ranges from A to Z. They are avoidable if they are known. It
should be clear that not everybody online is there to buy or sell real products. Some are there
for fraud and online scams. I am a victim of such disaster before I learnt my lesson in the
hard way. Internet fraud is all over my dear reader.
As earlier quipped, internet fraud is very common on the internet market. Online
shopping is characterized with internet catastrophes. Since online shopping in the most
popular means of shopping, it is important to note that everybody is now online. Exposure of
the internet is now the avenue for some weaklings and indolent people to fraud innocent
shopping seekers. One need to be on the watch out against internet fraud when one is
sincerely going for online shopping.
Poor network server.
Sometimes in developing countries of the world has poor network provider. It could in such a
way limit one’s online shopping in any form. News has made it clear that internet
connections are faster than each other; some are very slow while some are time wasters to
say.
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Goods in transit
Goods might be declared in transit when been tracked on the internet. This is a great
limitation. This hinders the buyer to receive the good at the stipulated time. He receives such
goods very late at the eleventh hour. It is very common to almost all shops. Steps are on to set
everything in the right order.
Currency barrier
Not every country in the world has the same currency. Dollars are popularly used but some
countries have no access to dollars. This has limited online shopping in the recent years.
There are limitations. There are dangerous strives. There are perils. Language could also limit
online shopping. Before you pay for anything online.
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CHAPTER - 10
RECOMMENDATIONS
94
10.0 RECOMMENDATION
Online shopping in India is poised for greater acceleration as PC and Internet penetration
grows. It is becoming one of the top Internet activities and there is a huge growth in this
business as more manufacturers and providers are integrating the Internet into their sales
model. But there are many things that need to occur in online shopping to generate higher
revenues and the key to it lies in the hands of the marketers. To make online shopping a
boom following methods can be followed.
India has a strong research and development (R&D) capability so companies should
innovate rapidly to take care of the security issues. Technology like text to speech softwares
should be innovated to take care of the security concern.
In India the total ownership of credit cards is small as compared to its population and
there are also hesitant in using it as a mode of online payment therefore alternative methods
of payment like cash on delivery (COD) where the end user pays cash after the product is
delivered and debit cards where the bank accounts are directly debited should be used. Other
technologies like encryption technologies trusted third-party certifications; digital ID systems
and prepaid cards should be used.
The consumers should be made aware that one of the safety aspect of using credit
cards online is that in case of disputed credit card payments for online transactions the onus is
on the merchants to prove that the transaction actually took place, as online users don't
physically sign a credit slip. As a result online users are protected from fraudulent use of
credit cards.
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There is a growth in the cellular phone market in India, more merchants should make
use of this device allowing the customers to access the Internet and use it as mode of payment
thereby obviating the need for PCs and credit cards.
It is not only important to pay strong attention to the security issue and create new,
innovative safeguards that protect consumers but the merchants should promote these
safeguards to the marketplace and make the prospective consumers aware that the
communications, personal data, credit card accounts, and transaction information can be
protected.
One of the factors that hinder Internet penetration in India is access. More companies
should adopt click and mortar model with the real world operations to complement its online
presence for e.g. customers can walk to the office to access its services.
Merchants should provide goods and services that offer the right value for money.
There should be transparency in policies (returns, privacy, shipping, etc), insurance against
fraud and a good after sales services should be provided to consumers making it an enjoyable
experience.
Consumers today demand a better, more efficient and less cumbersome way to
compare and buy products online. Innovative service should be provided to consumers so that
they can compare products, which are available online using their mobile phones.
Online shopping today is an incomplete, fragmented, and sometimes frustrating
process. Therefore merchants should set themselves apart from their competitors by factors
other than price, constantly innovate and move towards creating customer confidence to trade
online. They should provide massive selection at lower prices, offer a personalized customer
96
experience and their web sites should deliver a shopping experience that addresses all of the
consumer needs like recommendation about the products, feedback from other customers, etc.
Vendors should educate the customers about e-commerce like educating them on
safety tips like reading the item description, looking for a seller’s feedback score and asking
questions, detecting spoof mails and informing them about the new online crimes which
happen regularly.
In India still the penetration of Internet has not happened the way it should have been
which hampers online shopping. Ecommerce revolution can be brought about by providing
more broadband connections at affordable prices.
There is a huge market for business in the rural India therefore efforts should be such
that to bring these people also into experiencing online shopping. Companies should create
more Indian language software or content as Internet still is a primarily English language
world and language could be a barrier in rural India. Only few language portals like
webduniya.com exist today.
Most of the Indians still like to see the product before buying; efforts should be made
to change this mindset of the people by making them aware of the benefits of online
shopping.
To make online shopping big the shopping web sites should give the customers the
convenience to shop anything on a single site like ordering pizzas, movie tickets, groceries,
etc rather than in scattered places. The site should not only provide information content but
also tools to navigate and evaluate this information. The information on the site should be just
sufficient for the consumers to make a decision and not to overload them with information,
which results in confusion.
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Convenience and time saving are the main reason to shop online. Therefore Business
to Consumers (B2C) sites should be designed in such a way that consumers spend less time in
finding information they are looking for as delays in searching or loading a web page might
turn the consumers to other sites which have faster download and display times.
Since consumers control the experience they receive from shopping over the Internet,
there is a need to find ways of managing the amount of information available over the
Internet. Sites that are able to offer this information and present it in a simple way to
understand will become the preferred destination for online shopping.
The key to selling to a customer which cannot be seen is to get the customer to trust
the website with which they have electronic transactions.
Active participation from consumer marketing companies to manufacturing industries
is required to make online shopping a booming sector.
Some of the things, which the consumers should take into considerations while online
shopping, are:
Use a secure browser. The browser should comply with industry security standards,
such as Secure Sockets Layer (SSL).
Consumers should shop with the known companies, as it is easy to set up a shop
online under any name. If they are not familiar with a merchant they should ask for paper
catalogue or brochure to get a better idea about the merchandise and services and should find
about the company’s refund and return policies. Consumers should also search for the
reviews of the company.
Read the privacy policy on the site of the companies before shopping as this helps to
know what information is being collected and how it would be used.
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Keep a print record of the transactions this would come handy in case of any fraud.
One should find out how the company secures the financial and personal information
before paying the bills.
The personal information should be kept private like address, telephone numbers,
email, etc. One should avoid using telephone numbers or date of birth for establishing a
password instead should use a combination of numbers, letters and symbols.
Proper research should be done about countries shopping laws and merchant when
shopping from other countries.
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CHAPTER - 11
EXECUTIVE SUMMARY
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To help measure online shopping preferences behaviors and barriers for consumers around
the world, Pitney Bowes Inc. commissioned ORC International to survey approximately
1,000 adults each in Australia, Brazil, Canada, China, France, Germany, Japan, South Korea,
the United States, and the United Kingdom.
The survey, conducted online in June 2011, revealed that consumers around the world may
share some characteristics, but they also differ greatly country by country. Ninety-three
percent of consumers polled said they have purchased products online, 49 percent making an
online product purchase over the last 30 days. Shoppers in Germany, South Korea and the
U.K. responded the highest (98 percent) for making online product purchases followed
closely by Japan (96 percent) while in Canada, where online shopping was least prevalent,
more than four out of five (82 percent) reported having bought goods online.
Price of products (71 percent), selection of products (42 percent), the ease and speed of
online checkout processes (35 percent),and shipping costs/duties/taxes (35 percent) are the
most important considerations for purchasing products online. Overall, price of products was
the leading factor in all 10 countries. However, other preferences varied by country. For
instance, the ease and speed of the online checkout process was more important to consumers
in Germany and South Korea (both 59 percent), but much less important in Japan (11
percent).
High shipping costs (67 percent), additional fees at time of delivery such as duties and taxes
(47 percent), and the delivery time (39 percent) were the most important considerations for
discouraging consumers to complete purchases online. Consumers in the U.S. (83 percent),
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U.K. (79 percent) and Japan (78 percent) are the most likely to abandon online shopping carts
due to high shipping costs.
According to the survey, global consumers are more likely to purchase product categories
such as books, videos and music (58 percent), computer hardware and software (41 percent),
and consumer electronics (38 percent) online rather than in a brick-and-mortar store.
Consumers in China indicated they are more likely to purchase apparel (58 percent) and
footware (53 percent) online versus in a store. For almost every product category, consumers
in China responded they are more likely to purchase products online with the exception of
computer hardware and software (39 percent), and jewelry/watches and accessories (16
percent).
When asked about preferences for receiving information on new products, promotions or
other offers from retailers/merchandisers, 59 percent of respondents prefer e-mail, 25 percent
prefer catalogs and direct mail, and four percent prefer both text messaging and social media
channels (Facebook and Twitter).
Looking at all 10 countries, consumers in Brazil had the highest preference for receiving new
product and promotional information via e-mail (72 percent). Consumers in Australia (33
percent) had the highest preference for receiving information via catalogs and direct mail
followed closely by Canada (32 percent), Germany (31 percent) and the U.S. (30
percent). Text messaging information had the highest preference with consumers in South
Korea (13 percent), Japan (12 percent) and China (nine percent). Consumers in China (11
percent), and Brazil and South Korea (both five percent) responded the highest for receiving
information via social media channels.
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CHAPTER - 12
ANNEXURE
103
12.0 ANNEXURE
12.1 Annexure 1
Different models of consumer attitude towards online shopping
By:Mary Ann Eastlick
This chart shows how consumer attitude toward online shopping can lead either to approach
coping (wanting to shop online) or to avoidance coping (deciding not to search or shop
online). Someone who is optimistic toward the benefits of online shopping will develop
approach coping. A person who is pessimistic toward online shopping will think of the
drawbacks to it and decide to purchase in physical stores instead, which is avoidance coping.
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12.1 Annexure 2
FRAMEWORK FOR CONSUMERS’ INTENTIONS TO SHOP ONLINE
Source: research by Emerald
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Annexure 3
By: Thijs L. J. Broekhuizen
University of Groningen, The Netherland
Annexure 4
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Marketing Trends in India Online Travel Industry
Searches by Indians every month Over 1 billion
Searches by Indians that result in sponsored links shown,
every month
308 million
Total clicks on sponsored links by Indian users in a month Over 4.8 million
Number of advertisers targeting Indians web-users Over 40,000
Total annualized spend by all advertisers targeting Indian
users
Rs.236 crores (US $ 52 m)
Total annualized spend by Indian advertisers targeting Indian
users
Rs.72 crores (US $ 16 m)
Most amount spent by one advertiser Rs.9.7 crores (US $ 2.2 m)
All brands that spend more than Rs.10 lakhs a year in India 291
Indian brands that spend more than Rs.10 lakhs a year in
India
90
Average number of key words bought by a brand 42
Most key words bought by a brand 89,377
Most clicks bought by a brand in a month 599,968
Average cost per click paid by advertiser in India Rs.16.20 ($ 0.36)
Highest cost per click paid by advertiser in India Rs.266 ($ 5.92)
Average search campaign click-through rate 0.62%
Annexure 5
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Top Online Travel Industry using Search Engine Marketing and their annual spend in
Rupees.
Keywords Portfolio: Online Travel India Firms
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Chapter 13
CONCLUSION
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CONCLUSION:
Increased Internet penetration, a hassle free shopping environment and high levels of Net
savviness see more and more Indians shopping online. .
BARRIERS TO GROWTH OF ONLINE MARKET
Consumer Bias
Consumers often display a bias for brands that they know well and have had a good
experience in the past. Thus products of brands with a favorable bias will score over the
products of less popular brands. A few would risk buying expensive jewelry from an
unknown jeweler online.
Lack of ‘Touch –Feel-Try’ Experience
The customer is not sure of the quality of the product unless it is delivered to him and post
delivery of the product, it is sometimes a lengthy process to get a faulty or the unsuitable
product changed. Thus, unless the deliverables are as per the customers expectations, it is
hard to infuse more credibility in the e-Tailing market.
Mounting Competitive Pressures
To attract customers, the competing online players are adopting all means to provide products
and services at the lowest prices. This has resulted in making the consumers choice-spoilt,
who in turn surf various websites to spot the lowest price for the product. Thus, although the
number of transactions is increasing, the value of the products sold is continuously falling
owning to high competition and leaner margins.
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Seasonality
E-Tailing Market is faced by seasonal fluctuations. As told by an Industry player, “August to
February is the peak seasons for sale, while March to July is the dry seasons for sale”. During
the peak season, occasions that drive the sales are Diwali, Rakhi, Valentines Day, New Year,
Christmas, Mother’s Day, Friendship Day etc are. On these occasions younger generations
prefers buying and sending gifts online.
Credibility in Payment System
Online frauds and breach are the biggest barriers to online sales. As a result, prospective
buyers prefer staying away from revealing their credit card and bank details.
Untimely Delivery of Products
It might take a few minutes to search, book and pay for products and services online, but the
delivery of the product may take unreasonable time.
It is a challenge for E-marketers to convert low frequency online buyers into regular buyers
through successful website design and by addressing concerns about reliable performance.
Thus, the online retailing raises more issues than the benefits it currently offers
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CHAPTER - 14
QUESTIONNAIRE
112
13.0 QUESTIONNAIRE
QUESTIONNAIRE
Kindly highlight/bold your answers.
1. Do you use Internet?
Yes No
2. How long have you been using Internet?
Less than 1 year 3 – 5 years
1 – 3 years More than 5 years
3. On the average, how much time (per week) do you spend in surfing the Web?
0 – 5 hours 16 – 20 hours
6 – 10 hours More than 20 hours
11 – 15 hours
4. Have you purchased anything online ever?
Yes No
5. Which category (ies) of goods have you bought through Internet?
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Books Railway tickets
Electronic Gadgets Airline tickets
CD/Videos Computer Hardware
Accessories apparel Computer Software
Gifts Magazines
Event Tickets Movies tickets
Hotel Rooms/Car Rental Office Supplies
Jewellery Food / Groceries
Infant / Child items Home tools and products
Sporting goods Health and fitness products
Toys Any other, specify………………
6. When did u shop for the first time?
Last 6 months
6 months- 1year
1-3 year
3-5 year
More than 5 year
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7. How frequently did you purchase online?
Only once
2-4 times
More than 5 times
More than 6 times
8. Overall, were you satisfied with your experience of online shopping?
Highly Satisfied
Satisfied
Neither satisfied nor dissatisfied
Dissatisfied
Highly Dissatisfied
9. Where do you most often access the Internet?
Home Cyber-cafes
Office / College Any other, specify………
10. What are the activities that you use Internet for? (Kindly rank them between 1 to
5,with 1=most used, 2=used to a large extent, 3=used to a good extent, 4=used sometimes,
5=rarely used)
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Communication (E-mail, Instant Messaging, Bulletin Boards, News Groups, Chat,
etc.)
Information Gathering (Research, News, Sports scores, Search for employment, etc.)
Entertainment (Games, Adult entertainment, Entertainment sites, Sports, Music,
Web page design, etc.)
Finance (Investment portfolio, financial research, online banking, check stock/fund
quotes, trading, etc.)
Shopping (Researching purchases, purchasing, auctions, Selling, Classifieds, etc.)
11. Which category (ies) of goods are you planning to buy through internet in the near
future?
Books Railway tickets
Electronic Gadgets Airline tickets
CD/Videos Computer Hardware
Accessories apparel Computer Software
Gifts Magazines
Event Tickets Beauty products
Movies tickets Health and fitness products
Hotel Rooms/Car Rental Office Supplies
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Jewellery Food / Groceries
Apparel gift certificates Pharmaceuticals
Infant / Child items Home tools and products
Sporting goods Home appliances
Toys Any other, specify………………
12. What is your main motivation for buying through Internet?
Convenience (ease of purchase, home delivery, ability to shop 24x7) Price
Saves time
Superior selection/Availability
Product comparison
Any other, specify………………
13. What, according to you, are the most important barriers to purchase online?
I am worried about giving out my credit card number
I don’t have a credit card
I don’t like providing personal information
I don’t want to purchase from someone with whom I am not familiar
I enjoy going out to do my shopping
I like to see/touch the product in person, before I buy it
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Internet is too slow / Pages take too long to load
I am worried about the cost/hassle of returning the product
Delivery costs are too high
Prices are too high
Technical foul-ups prevent transactions from going through
I can’t find anything that I want to purchase on the Internet
I don’t know how but I am uncomfortable about purchasing through Internet
The process is expensive due to cost of access
Any other, specify…………
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PERSONAL DETAILS
14. Age:
Below 18 yrs
18 - 30 yrs
31 - 40 yrs
41 – 50 yrs
Above 50 yrs
2. Educational Background:
Non-Matriculate
Matriculate
Graduate
Postgraduate
3. Occupation:
Business/Self Employed
Service/Executive
Student
Any other, specify………………
4. Gender:
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Male
Female
5. Average Monthly Income:
Less than Rs. 5,000
Rs. 5,000 – Rs. 10,000
Rs. 10,000 – Rs. 25,000
Rs. 25,000 – Rs. 50,000
Above Rs. 50,000
Name: _____________________________
Contact No.: ______________________________
City: ______________________________
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CHAPTER 15
BIBILIOGRAPHY
121
BIBILIOGRAPHY
Prussakov Evgenii, Online shopping through consumer’s eyes, Am Navigator, 2008.
Price Lisa, The best of Online Shopping, Ballantine Books, 2001
Simpson Paul, Online Shopping: The rough Guide,3rd edition, 2000
Lillian Clark and Peter Wright, A review of Common Approaches to understanding
Online Consumer Behaviour, PP- 5.87- 5.122
Tonita Perea Monsuwe, Benedict G. C. Dellaut and KodeRuyter, What Drives
Consumers to shop Online? A literature review, PP- 765-789.
Donthu, Naveen and Adriana Garcia (1999), The Internet Shopper, Journal of
Advertising Research, V39 (3), 52-58.
Research report By: IAMAI
Emerald, Framework for consumers’ intentions to shop online, research report
Jarvenpaa Journal of Electronic Commerce Research, VOL. 6, and NO.2, 2005
http://en.wikipedia.org/wiki/online_shopping
www.iaciis.org/iis/2006_iis/PDFs/Changchit.pdf
http://www.ibimapublishing.com/journals/CIBIMA/2010/854516/854516.pdf
www.flipkart.com
www.amazon .com