CONSUMER BEHAVIOUR PROJECT REPORT

ON

CHANGING ATTITUDE OF INDIAN CONSUMER

TOWARDS ONLINE SHOPPING

AMITY BUSINESS SCHOOL

SUBMITTED TO: SUBMITTED BY:

Prof. B RAY MOHD. MOHSIN ISLAM

AMITY BUSINESS SCHOOL

ACKNOWLEDGEMENT
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The satisfaction and euphoria that accompany the successful completion of our project would be
incomplete without the mention of the people who made it possible and whose constant guidance
& encouragement crowned our efforts with success.

We express our sincere gratitude and thanks to Mr. Bedabal Ray for his support, guidance and
valuable suggestions without which we would not have been able to complete this project.

We are also thankful to all the respondents for their contribution who helped us in this study.

MOHD. MOHSIN ISLAM

TABLE OF CONTENTS

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Acknowledgement………………………………………………………. Page 1

Abstract....................................…………………………………………...Page 4

Introduction ...................................................……………………………Page 5

Literature Review………………………………………………………...Page 6

Research Methodology…………………………………………………...Page 8

Online Shopping In India………………………………………………....Page 9

Change in Attitude towards Online Shopping……………………............Page 11

Proposed Model………………………………………………………......Page 15

Implications of Research……………………………………………....…Page 20

Research Report byJuxtconsult ……………………………………….....Page 21

Conclusion………………………………………………………………..Page 23

Annexure……………………………………………………….................Page 26

ABSTRACT

The growing use of Internet in India provides a developing prospect for online shopping. If E-
marketers know the factors affecting online Indian behaviour, and the relationships between
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these factors and the type of online buyers, 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.
We have developed a model indicating online shopping behaviour and acceptance among
customers in India. The model was tested with a survey sample (n=50). We used factor analysis
technique to classify these factors which buyers keep in mind while shopping online.

INTRODUCTION

Internet is changing the way consumers shop and buy goods and services, and has rapidly
evolved into a global phenomenon. Many companies have started using the Internet with the aim
of cutting marketing costs, thereby reducing the price of their products and services in order to
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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 which are based on the traditional models of
consumer behavior, and then examine their validity in the Internet context.
.

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 behaviour research, there are general models of buying behaviour
that depict the process which consumers use in making a purchase decision. These models are

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very important to marketers as they have the ability to explain and predict consumers’ purchase
behaviour. The classic consumer purchasing decision-making theory can be characterized as a
continuum extending from routine problem-solving behaviours, through to limited problem-
solving behaviours and then towards extensive problem-solving behaviours [Schiffman 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 behaviour 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 behaviour 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 behaviour. Decision
sequences will be influenced by the starting point of the consumer, the relevant market structures
and the characteristics of the product in question. Consumers' attitude towards online shopping is
a prominent factor affecting actual buying behaviour.
Source: Jarvenpaa Journal of Electronic Commerce Research, VOL. 6, 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

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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 behaviour by the seller [Ganesan, 1994]. Lack of trust is frequently reported
as the reason for consumers not purchasing from Internet shops, as trust is regarded as an
important factor under conditions of uncertainty and risk in traditional theories.

Mayer et al. [1995] developed a model which combines traditional marketing philosophy on
consumer motivation to buy and the trust model. In this model, trust propensity; which is a
personality trait possessed by buyers; is an important antecedent of trust. In Internet shopping,
there is not much information available to the buyer regarding the seller, prior to purchase. A
buyer with a high propensity to trust will more likely be a potential customer than a buyer with a
lower propensity. Mayer et al. [1995] proposed that ability, benevolence and integrity constitute
the main elements of trustworthiness. Ability refers to skills, competencies and characteristics
that a seller has in a specific domain. In 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 good’. Sellers have to convince
buyers that they genuinely want to do good things for buyers, rather than just maximize profit.

RESEARCH OBJECTIVES

The objective of this study is to synthesize the representative existing literature on consumer
online shopping attitudes and behaviour based on an analytical literature review. In doing so, this
study attempts to provide a comprehensive picture of the status of this subfield and point out
limitations and areas for future research.

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The purpose of this research study is to investigate online consumer behaviour, 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 identify key factors influencing online shopping purchase behaviour.
2. To identify the factors that can explain the differences in online buying behaviour among
different online buyers.

RESEARCH METHODOLOGY

Data for this study was collected by means of a Survey conducted in NCR Region within a
period of Fifteen days. The sample size was 50. Questionnaires were filled at two different
places i.e Amity campus and Outside ATMs. .The Questionnaire (shown in Annexure) was used
mainly to test the model proposed for Attitude towards online shopping.

The type of research was both exploratory as well as Descriptive. Likert five point scale ranging
from Strongly Agree to strongly disagree was used as a basis of Questions.

We took around eleven different factors by studying the existing models of consumer attitudes
(Refer Annexure3,4 & 5 ) that play an important role in online purchase,then proposed a model
leading to online shopping.This model was then tested in our research by the mode of factor
analysis in SPSS.

ONLINE SHOPPING IN INDIA

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

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 Info by: IAMAI

If we observe the growth of Indian online transactions from the above graph, it is getting
doubled year by year.

The usage of internet in India is only 4% of the total population. This is also getting increased
day by day as the costs of computers are decreasing and net penetration is increasing. The cost of
internet usage is also getting lower, with good competition among the providers. Wi-Fi &
Wimax is also getting tested in Bangalore and other cities in India. This will increase the usage
as it goes more on wireless internet.

Indians are proving everytime 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.

Factors That Boost Online Shopping in India

• Rapid growth of cybercafés across India

• Access to Information
• The increase in number of computer users
• Reach to net services through broadband
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 • Middle-class population with spending power is growing. There are about 200 million
of middle-class population good spending powers. These people have very little time
to spend for shopping. Many of them have started to depend on internet to satisfy their
shopping desires.

.
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.

• Inline with global trends finally India has also started shopping online these days. As per
the study by IAMAI online shopping in India has rose from $11million in 1999-2000 to
$522 million in 2007 and it is expected to rise above $700 million by end March 2010.

• Indians are also Shopaholics like other Asians. There is a strong booming young adult
population in India with good levels of disposable income.

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%), beauty products (12%),
health and fitness products (12%), apparel gift certificates( 11%) and sporting goods (7%).

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There are over 120 million people online in India and this is expected to grow to 200 Million by
the end of 2010

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 (2007-08) the figures are touching Rs.
2200 crore, but are expected to increase by 150 percent by 2008-09 - to Rs 5,500 crores! And
two metros - Delhi and Mumbai are driving the growth:

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 LOGGING ONTO E-SALES
CITY Share in 07-08 Projection for 08-09
Mumbai 24% 40%
Delhi 20% 30%
Chennai 7% 11-12%
Kolkata 7% 10-11%
Bangalore 6% 9%

It was never thought that Indians would go in for e-shopping in such a big way.Ticketing, travel
bookings and even books and movies seem fine to buy online. Knowing that in India sizes vary
from brand to brand and quality is inconsistent, even of some electronic items, how is it that
there are people buying these items online?

Well, Assocham says that books are the hottest selling item on the internet. In fact most products
bought and sold off online are: books, electronic gadgets and railway tickets. However, people
are also buying clothes, gifts, computer and peripherals, and a few are buying home tools and
products, 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
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 in South Mumbai. And demographics show that the population of Mumbai is now
concentrated in the suburbs. Ofcourse, 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 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.

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 5. 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.

PRODUCT PREFERENCES CITY WISE

• Bangalore loves to buy books, electronic gadgets, computer peripherals, gifts movies,
bookings,actually just about everthing.
• 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

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

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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.

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 productor not, or which product to buy. This factor becomes even more
important in case of High Involvement product.
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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.

Quality of Internet Connection

Not only is the presence of internet connection neccessary 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 neccessity for this mode of shopping.

ATTITUDE TOWARDS ONLINE SHOPPING

Consumer’s attitudes 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).

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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 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)

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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. 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).

Informationon
Onlineshopping
Attitude
Intention
towards Decision Online
toshop
Security&Privacy online Making Purchase
online
shopping

Perceived
Usefulness

PerceivedEaseof
use CONSUMER SATISFACTION

Perceived
Enjoyment

PROPOSED MODEL

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 IMPLICATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH
As the model indicates, three out of the five dependent variables (consumer attitudes, intentions,
and purchasing behavior) and three out of the five independent variables (perceived usefulness,
perceived ease of use, perceived enjoyment, information on online shopping, security and
privacy, quality of internet connection ) receive the most attention. This seems to constitute the
main stream of research in this area. It is found that personal characteristics such as
vender/service/product characteristics and website quality significantly affect online shopping
attitudes, intention, and behavior.
The role of the external environment, demographics, online shopping decision making, and
consumer satisfaction are less well represented in the proposed model.. Any number of factors,
including vender/service/product characteristics, website quality, attitude towards online
shopping, intention to online shopping, online shopping decision making, and online purchasing,
may influence consumer’s satisfaction. More importantly, the extent to which customers are
satisfied is directly related to attitudes toward online shopping or toward specific Internet stores.
The relative importance of this factor in determining such consumer behavior as repeat
purchases suggests that further research on consumer satisfaction with online shopping needs to
be conducted.

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 LIMITATIONS OF THIS STUDY

Limitation of the study is the selection of the existing studies. Owing to time limitation, we only
searched a few number of journals. 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.

Indian E-Comm. Report Finds Heavy Spenders Driving Sales

By Devin Comiskey
August 16, 2007

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 2007 and 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.

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"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.

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 car 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."

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.

LATEST
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 • 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.

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 to buy 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 proces 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.

Seasonality
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eTailing 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.

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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.But at the same time the companies need
to reduce the risks related to consumer incompetence by tactics such as making purchase
websites easier to navigate, and introducing Internet kiosks, computers and other aids in stores.
The goal is not to convert all shoppers to online purchasing, but to show them it’s an option. In
addition to above, efforts need to be taken to educate the online buyers on the steps that need to
be undertaken while making an online purchase. Moreover, the feedback of an online buyer
should be captured to identify flaws in service delivery. This can be done through online
communities and blogs that serve as advertising and marketing tools and a source of feedback
for enterprises. We found that 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. The quality of products offered online and procedures for service delivery are yet to be
standardized. Till the same is done, the buyer is at a higher risk of frauds.

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 ANNEXURE 1

Questionnaire

1. Have you ever made a purchase over the Internet? a. Yes b. No

2. When was the last time you made a purchase over the Internet?

a. One month ago b. Two months ago c. More than two months ago

3. In the past 3 months what items have you purchased on the Internet?

a. Books b. Videos / DVDs / Games

c. Airline Tickets / Reservations d. Clothing / Accessories / Shoes
e. Music f. Electronic Equipment
g. Computer Hardware h. Tours / Hotel Reservations
i. Event Tickets j. Computer software
k. Cosmetics / Nutrition Supplies l. Groceries
m. Sporting Goods n. other items

4. Which method (or methods) of payment did you use to make your last purchases over the
Internet in the past 3 months?

a. Credit /Debit Card b. Bank Transfer c. Cash on Delivery

d. Money Transfer e. Other Method

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5. What helps you decide which site to use for shopping online?

a. Search engine b. Personal recommendation c. Special offer I saw

d. Online Advertising e. Same store I buy from offline
f. TV/print or other advertising

5. Do you have enough information about online products and services?

Totally disagree Totally agree

6. Online shopping is useful:

Totally disagree Totally agree

7. Online shopping is easy to do:

Totally disagree Totally agree

8. Online shopping is enjoyable:

Totally disagree Totally agree

9. Online shopping is secure:

Totally disagree Totally agree

10. Quality of internet connection is good:

Totally disagree Totally agree

26
11. For each of the following, please tell if these concern you when you are making a
purchase over the Internet.
Great deal Fair amount A little Not at all
a)Not sure of product quality
b) Cannot bargain/Negotiate
c) Not sure of security of transactions
/Credit card misuse
d) Need to touch and feel the product
e) Significant discounts are not there
f)Have to wait for delivery

NAME:

AGE: below 23 yrs

23 yrs- 40 yrs

40 yrs-55yrs

55yrs and above

GENDER: Male/ Female

MONTHLY INCOME: below Rs. 20,000

Rs. 20,000-50,000

27
 Rs. 50,000 and above

CONTACT NO:

EMAIL ID:

ANNEXURE 2

RESULTS OF FACTOR ANALYSIS

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of
Sampling Adequacy. .667

Bartlett's Test of Approx. Chi-

83.193
Sphericity Square
df 15
Sig. .000

Communalities

Initial Extraction
Information
1.000 .572
Percieved
usefulness 1.000 .675

Ease of use
1.000 .763
Percieved
1.000 .812
enjoyment
Security
1.000 .260

28
 Quality of internet
1.000 .673
connection
Extraction Method: Principal Component Analysis.

Total Variance Explained

Extraction Sums of Rotation Sums of Squared

Initial Eigenvalues Squared Loadings Loadings
Compo % of % of % of
nent Varianc Cumulat Varianc Cumulat Varianc Cumulat
Total e ive % Total e ive % Total e 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 62.584 1.184 19.732 62.584 1.338 22.308 62.584
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.

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

29
 Quality of internet
.054 .819
connection
Extraction Method: Principal Component Analysis.
a 2 components extracted.

Rotated Component Matrix(a)

Component
1 2
Information
.362 .664
Percieved
usefulness .684 .456

Ease of use
.873 .040
Percieved
enjoyment .890 .139

Security
.463 -.213
Quality of internet
-.222 .790
connection
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a Rotation converged in 3 iterations.

Component Transformation Matrix

Componen
t 1 2
1 .943 .334
2 -.334 .943
30
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.

ANNEXURE:3

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.
31
 ANNEXURE:4

FRAMEWORK FOR CONSUMERS’ INTENTIONS TO SHOP ONLINE

32
Source: research by Emerald

ANNEXURE:5

By: Thijs L. J. Broekhuizen

University of Groningen, The Netherlands
33
 ANNEXURE:6

Marketing Trends in India Online Travel Industry

Searches by Indians every month Over 1 billion

Searches by Indians that result in sponsored links shown, 308 million

every month

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 Rs.236 crores (US $ 52 m)
users

Total annualized spend by Indian advertisers targeting Indian Rs.72 crores (US $ 16 m)
users

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 90

India

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%

34
 ANNEXURE:7

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

Keywords Portfolio: Online Travel India Firms

35
Source: IMNAI & Pinstrom

REFERENCES

• Consumer online shopping attitudes and behavior: an assessment of research ,by: Na Li

and Ping Zhang ,Syracuse University

• Consumer attitudes toward shopping venues affect marketing strategies .By Susan
McGinley

• The State of E-Commerce: Online Shopping Trends,By James Maguire

• Journal of Electronic Commerce Research, VOL. 6, NO.2, 2005

• Research report by IMNAI & Pinstrom
• Research report By: Thijs L. J. Broekhuizen ,University of Groningen, The Netherlands
• Framework for consumers’ intentions to shop online, research by Emerald
• Research report By: IAMAI

36