Consumer Perception Towards Online Shopping in India Essay

1.1 INTRODUCTION The numbers of internet users are increasing because of the accessibilities of technology, the availability of information, and the ability to interact through the Internet increase and evolve. The obvious capabilities of the Internet include road for gathering information, purchasing a product, or rendering a service. These advances in Internet technology allow for the expansion of shopping options beyond traditional methods that may be more time consuming. Issues with having to physically gather information with offline shopping methods are alleviated, and customers are better able to efficiently use their time. For instance, instead of having to physically visit different stores to compare prices or rely on circular pamphlets in newspapers, a consumer is able to search and retrieve needed information through the Internet. The Internet explosion has opened the doors to a new electronic world. Consumers are now able to use the Internet for a variety of purposes such as research, communication, online banking, and even shopping. With such advantages, the Internet is rapidly becoming the main method of communication and of conducting business conveniently. With a growing number of households turning towards the Internet and the world of e-commerce to shop, invest, make payments, and do online banking, new technological advancement will have to come about to make these transactions secure. Electronic retailing or online shopping, is shopping on the internet without the consumer having to visit a physical store. With the increased use of the internet, the scope for the online shopping is growing. A In 2012, 9.6 million Australians aged over 15 years will make online shopping purchases, according to the latest research by PwC and Frost & Sullivan (2012). Over the next 12 months, 88% of online shoppers in Australia are expecting to maintain or increase their online expenditure, indicating that there is solid momentum in online shopping uptake. This continual rapid growth in Australia and offshore is driving structural changes in the traditional retail model. US online population will increase nearly 50%, from 1471.5 million in 2001 to 210.8 million by 2006 (Cumulative Annual Growth Rate of 8.2%) and online retail sales will grow from US$47.8 billion in 2002 to  $130.3 billion in 2006. Similarly WIPO (2007) cited that about 10% of the world’s population in 2002 wa s online, representing more than 605 million users. In India also the internet user base has grown to an impressive number from 87.1 million by December 2012 from 78.7 million users in October 2012, who accessed Internet through dongles and tablet PCs according to Internet and Mobile Association of India (IAMAI) and IMRB (Dec 2012). According to them India is expected to have close to 165 million mobile Internet users by March 2015, up from 87.1 million in December 2012 as more people are accessing the web through mobile devices and dongles. Nearly 60% of online users in India visited a retail site in November 2011, with the number of online shoppers increasing 18% in the past year said com Score in a research report. According to the report on visitation to the top retail and coupon sites in India, coupon sites are rapidly gaining in popularity, with 16.5% of the Indian online population visiting the category in November, led by Snapdeal.com and Mydala.com. In November, 27.2 million online users in India, aged 15 and older, accessed the retail category from a home or work computer, an increase of 18% from the previous year, as consumers continue to turn to the web to shop for and purchase items and retailers continue to increase their online visibility through active marketing campaigns. (www.moneylife.in, Feb 28th, 2013). There are many advantages of doing online shopping like there is no geographical boundary-a consumer in Delhi can shop for something which an e-store in Punjab is offering, there is no time restrictions- the shopping is 24Ãâ€"7, the payment is online-there is no need to even handle the cash. Despite the advantages of online shopping all the consumers are not participating in online transaction. Many business firms are more and more businesses continue to establish an online presence, they are finding that some consumers are still reluctant to shift in that same direction. For various consumers there are still concerns with security and passing  personal data over the Internet. There is a disparity between the number of consumers who visit a site and the number of actual purchases being made. Despite the millions of people who use the Internet everyday and visit various shopping sites, the number of consumers who do not abandon their shopping carts but actually complete a purchase averages to only about three percent. This leaves a large portion of the Internet population as non-participants in online transactions as compared to those who fully complete transactions online and make purchases. Instead, these non-participants may abandon the purchase completely or fulfill the transaction in an offline setting. As such, it is important for online businesses or offline businesses interested in venturing into the online market to understand their consumers’ perceptions, online and offline, and what factors influence their shopping decisions. With better understanding of what factors play into consumer decision making in making transactions online or offline, retailers and businesses can be better gear themselves to serving their customers in either of the shopping venue s. 1.2 OBJECTIVES OF THE STUDY To know the demographic profile of the customers and its impact if any on the online buying. To know the factors affecting the perception of Indian online buyers. CHAPTER II LITERATURE REVIEW This part includes the Review of previous studies, articles and conceptual framework for the related studies. More analysis is not sufficient to present real framework of the study. So review of related materials should be deal with to give the research a clear vision, past study and knowledge provides foundation to the present day. Review of literature includes the following topics: 2.1 Conceptual Framework 2.2 Reviews from Previous Studies 2.1 CONCEPTUAL FRAMEWORK As Internet usage is increasing, so is online shopping particularly in those countries whose Marketing infrastructures are well developed. Customers can shop at anytime and have access to products not available in their geographic region. Moreover, they are now able to access the Internet, not only from their personal computers, but also from advanced electronic devices such as Palm Pilots and mobile phones. The growth of Internet technology in India has enormous potential as it reduces the costs of product and service delivery and extends geographical boundaries in bringing buyers and sellers together. Also, due to an increase in high-speed Internet access connections, lower connection costs, and increasing consumer competence, e-commerce activity will continue to grow as the availability and ease with which the Internet provides consumers the ability to handle needed tasks increasingly develops. However, not all consumers are turning to the Internet for shopping. While the number of Internet users who have made a purchase at one time is more than half in the United States, this does not explain the disparity between the number of visits websites recorded and the number of actual purchases made online. This research mainly talks about the factors that affect the consumers’ online shopping behavior of consumer. It is not sure that all the people who visit websites do make online purchase. This will also focus on the point that what is the consumes perception towards online shopping and their intention to make purchase are not only affected by the ease of internet, usefulness and enjoyment but also affected by the also by exogenous factors like consumer traits, situational factors, product characteristics, previous online shopping experiences, and trust in online shopping. The other thing that the research will focus is that do the demographic factors make any influence on the online shopping. This research will focus  on the point that do these demographic factors like age, gender, income level etc really make any influence on the buying behavior of the consumers. Not only on the demographic factor that this research will focus on, will also try to find whether there is any relationship between the customers and the website quality. Do these online shopping websites quality make any influence on the buying intention of the buyers? 2.2 REVIEWS FROM PREVIOUS RESEARCH UPADHYAY.P AND KAUR J (2006),†Analysis of Online Shopping Behaviour of Customer in Kota City†. This study has focused on factors which online Indian buyers keep in mind while shopping online. The objective of the study was to create an awareness of e-commerce and make people interested in internet commerce. According to the study, they found that the most preferred product of online buying is travelling tickets and clothing remains the least preferred choice of online shoppers and most of the consumers who have experienced online shopping are very satisfied ZIA UL HAQ (2009) in her research on â€Å"Perception towards online shopping: an empirical study of Indian consumers† said that the perception of online shoppers is independent of their age and gender but not independent of their qualification & gender and income & gender. According to the researcher consumers’ perceptions of the customer service, commitment and web security of online purchasing exhibit significant relationships with their online buying intention. Web security was the major concerning factor to influence the online shopping. They have a fear that their important documents passwords can be hacked due to online shopping, so the major concern of consumers is about the web security. She also says that Marketers need to realize that the online marketing environment affects the way consumers view and develop relationships. During her study she found that Indian consumers considered that their online purchasing will be influenced by good quality website. Thus it is believed that overall website quality does help in enhancing the consumers to buy online. Also commitment is the important factor that affects online buying and most of the consumers are concerned about on-time delivery of their products. The results of this study show  that there is a significant association between commitment and online shopping. CORPUS CHRISTI(2009) in his research on â€Å"The perception of consumer on online shopping† has provided some of glimpse about the consumers mind as what factors are perceived differently by consumers who prefer online shopping and those who prefer offline shopping. According to him there are five factors which that the two group consumers perceived differently. These factors are (1) perceived risk with online shopping, (2) past experience with online shopping, (3)perceived benefits of online shopping, (4) perceived ease of online shopping, and (5) perceived uncertainty of online shopping. Through these factors the business firms should be aware of their online consumers’ perception and of what preference for online and offline shopping avenues. Focusing on these factors the researcher thinks that the firms can don necessary work to attract and retain more and more customers. In his research after all the finding he says that Being aware of what perceptions drive consu mers to pick and prefer one avenue of shopping to another allows businesses to better cater to consumers, thus helping them attract and retain customers. RASTOGI.A.K (2010), â€Å"A study of Indian Online Consumers and their Buying Behaviour† made an attempt to study the buying behaviour of Indian online consumers in his research. According to his study about 44% students use Internet in India and overall 72% of young people access Internet on regular basis. The findings of the study shows that ratio of male consumers is very high in online shopping and most of the respondents pay in cash on delivery. This research shows that online shopping has very bright future in India. . Perception towards online shopping is getting better in India. With the use of internet, consumers can shop anywhere, anything and anytime with easy and safe payment options. Consumers can do comparison shopping between products, as well as, online stores. VAGGELIS SAPRIKIS, ADAMANTIA CHOULIARA AND MARO VLACHOPOULOU (2010) conducted the research on â€Å"Perceptions towards Online Shopping: Analyzing the Greek University Students’ Attitude† observed the significant differences between  the two groups of respondents that is online shopping adaptors and online shopping non adaptors. From their research they concluded that adopters had higher expectations from online shopping on issues relating to privacy policy and risk. Also they identified between adopters and non-adopters regarding their particular perceptions on advantages and problems of online shopping. MEHRDAD SALEHI(JAN 2012) in her study on â€Å"Consumer Buying Behavior towards Online Shopping Stores in Malaysia† has focused on nine independent variables namely appearance, quick loading, security, sitemap, validity, promotion, attractiveness, believability, and originality that influence the buying behavior on consumers while doing online shopping. During her research she found that first five factors influence consumers towards online shopping and security is the factor that contributes most towards online shopping. According to her the last four factors (promotion, attractiveness, believability, and originality) don’t significantly influence online shopping intention which indicate that advertisement doesn’t have an important effect on online shopping. Security and validity of website were the one that influences the online consumers. Also attractiveness had the minimum influence on online shopping intention. KANWAL GURLEEN( MAY 2012) in his study on â€Å"Consumer Buying Behavior towards Online Shopping, the case of punjab† stated that Price consciousness, Convenience and Variety, Easy Payment options and Challenges of Online Shopping are the four major factors that have significant influence on the perception of the online consumer toward online shopping. As that of the other researchers on this topic, he also found the same problem that the consumers are not able to trust the websites as they have to give their credit card details. Some of the websites the customers don’t feel trustworthy. Also the online purchases take a longer time in shipments and deliveries. The researcher found that the psychology of an Indian consumer is still the same of checking the product physically before purchasing it, which creates a mental hurdle for online shopping. DAHIYA RICHA (2012), from her research on â€Å"Impact of demographic factors of consumers on online shopping behavior: A study of consumers in India† found that gender impacts frequency of on-line shopping positively and Family Size impacts overall spend on on-line shopping. Her study somewhat suggested that Indian Consumers have perceived online shopping in a positive manner which suggest that online shopping in the country is growing. Despite this the frequency of online shopping is very less. She has also suggested the organizations that to formulate their plans and strategies in the country regarding the online shopping they must use relevant variables and factors which the research has identified. The organizations can prioritize the consumer implicit and explicit requirements in online shopping environment. The results can also be used by various organizations to identify their target customer segments. MOHAMMAD HOSSEIN MOSHREF JAVADI1,HOSSEIN REZAEI DOLATABADI1, MOJTABA NOURBAKHSH1, AMIR POURSAEEDI1& AHMAD REZA ASADOLLAHI (SEPTEMBER 10, 2012) conducted the research on,† An Analysis of Factors Affecting on Online Shopping Behavior of Consumers† where the examined the factors affecting on online shopping behavior of consumers. They created many hypothesis and these hypothesis testing indicated that financial risk and non-delivery risk has negative effect on the attitude towards online shopping behavior. Which suggest that e-retailers should make their websites safer and assure customers for the delivery of their products. According to them if there has been positive effect attitude toward online shopping on online shopping behavior of consumers it would indicate that considering attitude variables make a substantial contribution in online shopping. Also, subjective norms have positive effect on shopping behavior. This means the more people suggest e-buying to each other, the more this buying method will be popular among people. This makes necessary the use of word of mouth marketing for retailers. Domain specific innovativeness has positive effect on online shopping behavior. This means that marketing specialists should target this society in their marketing strategy formulation for better effectiveness of their marketing program. This means that marketing specialists should target this society in their marketing strategy formulation for better  effectiveness of their marketing program. CHAO CHAO CHUANG & DR. FU-LING HU (NOVEMBER, 2012) in their research on,† An empirical analysis of the relationship between website characteristics and consumer online buying behavior† concluded that the website security, website design, website reliability and website customer service are the four main factors which affect consumer perceptions of their online purchasing experiences. Online buyers have different viewpoints of these four factors. Website design has the highest rating score, followed by website customer service. Website reliability is ranked third, and the lowest is website security. Also they suggested that with online shopping, consumers can browse the entire product-assortment with competitive prices. In order to consolidate this advantage, E-retailers should choose more famous products or brands to market online. Branded products and services are usually thought by customers as having better qualities. They said that the online shopping company should induce the regular online buyers as they shop most frequently and they should make the desired products available and the purchase transaction easy and also obtain the competitive prices in order to retain their regular customers and increase their loyalty towards the company. As trial customers are interested in browsing on the website maybe they see online shopping as enjoyment and look for the potential entertainment arising from the online shopping experience. The purchase of goods may be incidental to the experience of Internet shopping. If trial online buyers initially have pleasing online shopping experience, they are more likely to continue subsequent shopping behavior: they will browse more, make more unplanned purchasing, and look for more stimulating products. In the face of severe competition and continually increasing customer expectations, e-commerce companies must understand how to identify, help and retain their profitable existing customers. E-retailer should emphasize the enjoyable aspect of online shopping in their promotions for trial online buyers and then create the competitive advantage. CHAPTER III RESEARCH METHODOLOGY The data for the study was gathered through a structured questionnaire. The questionnaire consists of two parts. The first part of the questionnaire included questions about their demographic profile like age, Education, income, living area and gender. The second part consisted of questions measuring all the variables which are used to measure the online shopping. All the questions were utilizing on a Likert scale ranging from 1= strongly disagree to 5 = strongly agree. Research Design has been classified into the following subsections: SAMPLE SIZE- Till the date of the submission of this interim report, about 100 questionnaires was distributed through e-mail and social networking sites SAMPLING PROCEDURE- The respondents were selected by the random sampling. DATA COLLECTION PROCEDURE This _primary_ (first hand, or collected by the researcher, i.e., myself, in the present study) and data was used for the analysis. A questionnaire has been designed to collect the required information. The questionnaires were filled by the respondents through the internet (through emails and social networking sites). [A sample of the questionnaire is showcased in Annexure] ANALYSIS Descriptive statistical research technique has been used in the study and statistical packages like SPSS and Microsoft Excel have been used for the analysis. TOOLS USED: CHI -SQUARE TEST: A chi-square test is used when you want to see if there is  a relationship between two categorical variables. In SPSS, the chisq option is used on the statistics subcommand of the crosstabs command to obtain the test statistic and its associated p-value. FACTOR ANALYSIS: FACTOR ANALYSIS: Factor analysis attempts to identify underlying variables, or factors, that explain the pattern of correlations within a set of observed variables. Factor analysis is often used in data reduction to identify a small number of factors that explain most of the variance observed in a much larger number of manifest variables. Factor analysis can also be used to generate hypotheses regarding causal mechanisms or to screen variables for subsequent analysis