Project Synopsis

CUSTOMERS ATTITUDE TOWARD ON - LINE RETAILING...

A Virtual Shopping Experience

Prepared by
Name: Jiju John
Roll No: 571119435

ACKNOWLEDGEMENT

The success of any project study depends upon a number of factors among
which the proper guidance from the experts in the industry and a faculty
plays an important role. I take this opportunity to convey my sincere
thanks and gratitude to all those who have directly or in directly helped
and contributed towards the completion of this project. I take here a great
opportunity to express my sincere and deep sense of gratitude to our SMU
Edulight Centre Professor Gangi, for giving me an opportunity to work on
this project.

By Jiju John

Abstract

In the era of globalization electronic marketing is a great revolution. Over

the last decade maximum business organizations are running with
technological change. Online shopping or marketing is the use of
technology (i.e., computer) for better marketing performance. And
retailers are devising strategies to meet the demand of online
shoppers they are busy in studying consumer behavior in the field of
online shopping, to see the consumer attitudes towards online
shopping. Therefore we have also decided to study consumers attitudes
towards online shopping and specifically studying the factors influencing
consumers to shop online.
The sample size selected for this research is 100 and we have used
convenience sampling technique. Our findings indicated that among
the four factors selected for this research the most attractive and
influencing factor for online shoppers in India is Website
Design/Features, following convenience the second most influencing and
thirdly time saving. Results have also showed that security is of important
concern among online shoppers in India. The research has also found that
there are some other factors which influence online shoppers including,
less price, discount, feedback from previous customers and quality of
product. For the second research question i.e. who are online shoppers in
term of demography: the correlation results for the age and attitudes
towards online shopping has showed that elderly people are not so keen
to shop online. Whereas for education it is concluded that higher
education makes online shopping less attractive, for the income the
correlation results are so weak hence we could not conclude anything out
of it. It is expected that this study will not only help retailers in India to
devise successful strategies for online shoppers but it will also provide a
base for similar studies in the felid of consumer attitudes towards online
shopping.

Index
Introduction
Chapter 1: Retail Market Evolution in India
Chapter 2: Evolution of E - Retailing in India
Chapter 3: Research Methodology
Chapter 4: Online Shopping In India
Chapter 5: Change in Attitude towards Online
Shopping
Chapter 6: Proposed Model
Chapter 7: Factors affecting Indian consumers online
buying behavior
Chapter 8: Research Report by Juxtconsult
Conclusion
Bibliography

Introduction
Internet is changing the way consumers shop and buys goods and services,
and has rapidly evolved into a global phenomenon. Many companies have
started using the Internet with the aim of cutting marketing costs, thereby
reducing the price of their products and services in order to stay ahead in
highly competitive markets. Companies also use the Internet to convey,
communicate and disseminate information, to sell the product, to take
feedback and also to conduct satisfaction surveys with customers.
Customers use the Internet not only to buy the product online, but also to
compare prices, product features and after sale service facilities they will
receive if they purchase the product from a particular store. Many experts
are optimistic about the prospect of online business.
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
traditional models of consumer behavior, and then examine their validity in
the Internet context. E-commerce and e marketing are the two important
terms in the new Internet - based business domain.
E-commerce: It can be defined as a way of conducting business by
companies and customers performing electronic transactions through the
Internet.
E-marketing: It can be defined as the promotion of products or services
through the Internet whereas; e-tailing can be defined as selling products
and services by using the Internet.
Wang (2002) has provided a broad definition of e- tailing by defining it as
the selling of goods and services to the consumer market via the internet.

According to Turban et al. (2006), e-tailing is defined as retailing conducted

online, over the internet. In general, the activities of e-tailing encompass
three main activities.

They are:
(i) A product search facility (often referred as a product evaluation or
information gathering facility)
(ii) An on-line purchase function
(iii) A product delivery capability (Koalas and Galbraith, 2000).
Like general marketing activities of an organization, E-retailers have also
stick to the same 4Ps of marketing activities. They are: Product, Price,
Promotion and Place. With regard to the right products, e-stores can
offer a larger spectrum of product offering like traditional retailers in
categories ranging from electronics to shoes. E-store is the Internet version
of stores that set up electronic store fronts on the Internet. It provides all
kinds of products and renders service to the e-customer at the click of a
mouse button and makes money by selling products directly to ecustomers. When it comes to the right price, e-stores can be operated with
low profit margin because of the lower cost and higher sales volume. As for
the right promotion, e-stores have unlimited direct marketing, advertising
and selling opportunities. Finally, with regard to the right place; the
location of e-stores is not important in the Internet and e- customer can
connect and purchase products and services from the Internet at any time
and place.
According to Lim and Dubinsky (2004), e-store is defined as a
commercial web site on which e-customers can shop and make purchases.
According to Rao (1999), e-commerce offers increased market activity for
retailers in the form of growing market access and information and
decreased operating and procurement costs. The consumers can gain
better prices due to the competition and also can enrich their knowledge
on goods and services. According to a survey conducted by Internet and
Mobile Association of India (IAMAI) and Indian Market Research Bureau
(IMRB), the e-commerce market in India has garnered Rs. 9210 crore in

2007- 08, whereas e- tailing market was only about Rs. 1150 core). In
general, e-tailing industry, from a business perspective offers an
opportunity to cater to consumers across geographies, no operational
timings, unlimited shelf space and all this with miniscule quantity of
infrastructure. For a country like India, the growth in the e- tailing market is
driven by the need to save time by urban India. Besides with over 2.5
billion internet users, access to internet has also played an important role
in growing the markets.
Consumers decision-making process has considerably changed with the
introduction of the Internet as an alternative channel for shopping. The new
wave of consumerism coupled with increasing urbanization and burgeoning
middle class with paradigm shifts in their demographic and psychographic
dynamics have driven consumers frequently to use retail websites to
search for product information and/or make a purchase of products. In
India, the shift from physical stores to e-store takes place due to the inadequacy of time of consumers and the relatively high disposable incomes
as well as due to a high need for labor-saving goods and services (Gehrt,
Yale and Lawson 1996). Again on the recent report of Internet and Mobile
Association of India (IAMAI), the Indian e-commerce market will gallop at an
impressive growth rate of 47 per cent to over Rs 46,000 crore in the year
2011. Comprising about 81 per cent of the total e-commerce in the
country, the online travel market, which includes booking rail and air
tickets, hotel accommodations and tour packages, is estimated to grow by
50 per cent and touch Rs 37,890 crore by December, 2011. E-tailing sector
in India is expected to grow by 34 per cent and touch Rs 2,650 crore in the
year 2011. Bullish on the growth prospects of the online market, the Indian
retail market has observed that online spending has been skewed toward
certain products in e-tailing. E-tailing, which includes purchases of durable
products such as electronic items, home and kitchen appliances, as well as
personal items like apparels and jewelry, constitutes 8 per cent of the
overall e-commerce market in India. The top E-tailers in India are
indiatimes.com, fabmart.com, rediffshopping.com. They have managed to
retain their lead due to innovative business strategies, supply chain model
and changing urban lifestyles.

Chapter 1: Retail Market Evolution in India

A)

Retail Market Overview in

India (Contd.)

Chapter 2: Evolution of E - Retailing in India

The rapid growth of e-commerce in India: Over the last two decades,
rising internet and mobile phone penetration has changed the way we
communicate and do business. E-commerce is relatively a novel concept. It
is, at present, heavily leaning on the internet and mobile phone revolution
to fundamentally alter the way businesses reach their customers.
While in countries such as the US and China, e-commerce has taken
significant strides to achieve sales of over 150 billion USD in revenue, the
industry in India is, still at its infancy. However over the past few years, the
sector has grown by almost 35% CAGR from 3.8 billion USD in 2009 to an
estimated 12.6 billion USD in 2013.
Industry studies by IAMA2 I indicate that online travel dominates the ecommerce industry with an estimated 70% of the market share. However,
e-retail in both its forms; online retail and market place, has become the
fastest-growing segment, increasing its share from 10% in 2009 to an
estimated 18% in 2013 Calculations based on industry benchmarks
estimate that the number of parcel check-outs in e-commerce portals
exceeded 100 million in 2013. However, this share represents a miniscule
proportion (less than 1%) of Indias total retail market, but is poised for
continued growth in the coming years. If this robust growth continues over

the next few years, the size of the e-retail industry is poised to be 10 to 20
billion USD by 2017-2020. This growth is expected to be led by increased
consumer-led purchases in durables and electronics, apparels and
accessories, besides traditional products such as books and audio-visuals.

E-commerce logistics models a radical shift from regular

logistics:
The strong emergence of e-commerce will place an enormous pressure on
the supporting logistics functions. The proposition of e-commerce to the
customer is in offering an almost infinite variety of choices spread over an
enormous geographical area. Firms cannot compete solely based on sheer
volumes in todays ever-evolving, information symmetric and globalised
world of e-commerce. Instead, the realm of competition has shifted to
delivering to ever shortening delivery timeliness, both consistently and
predictably. Negligible or zero delivery prices, doorstep delivery,
traceability solutions and convenient reverse logistics have become the
most important elements of differentiation for providers. While the current
logistics challenges relating to manufacturing and distribution of consumer
products and organized retail are well-known, the demands of e-commerce
raise the associated complexities to a different level. E-commerce retailers
are well aware of these challenges and are cognizant of the need to invest
in capital and operational assets.

Reaching the customer Going beyond the traditional

definition:
The essence of e-retailing is in its ability to transcend physical boundaries
and reach customers in a manner different from the traditional brick-andmortar stores, to their very doorstep. However, the base of the e-retailing
model is technology and logistical solutions that facilitates the customer
acquisition and the final reach process. E-commerce further brings to the
table vagaries in customer orders accompanied with difficult scenarios
such as free delivery, order rescheduling, cancellation, returns and cashon-delivery. Additionally, an expected minimized turn-around time (TAT)
which will potentially lead to word-of-mouth publicity, feedback and
customer retention to the e portal or website. An information network
which shares updated information with respect to inventory status,

demand schedules and forecasts, shipment schedules and promotion plans

among all the stakeholders of the supply chain will form the backbone of
an e-retailer.

Chapter 3: Research Methodology

Different techniques such as Questionnaires, Interviews and Observations,
etc. have been used by earlier studies for investigating attitudes in online
shopping among different demographic regions, varying age groups,
tastes, expectance, interests, etc. For this study, a questionnaire based
survey design is chosen as it allows comparatively huge population simply
and efficiently. Data has been gathered from the sample population of 100
students, 50 housewives, and, 50 persons from general public through
questionnaire - based survey. The questionnaire was presented in a straight
line to target groups of different programs of the university. This is a survey
- based research and is carried out through a questionnaire, which was
circulated among 200 students of different programs, 50 housewives, and

50 persons from general public through questionnaire -based survey. The

questionnaire was based on 5- point liker scale. They asked to point out the
degree of their agreement or disagreement on a statement ranging from
1 (strongly agree) to 5 (strongly disagree). First part consists of
demographic evaluation using Basic Questions about name, Sex, Age,
Occupation, Income etc. Second part consists of perceived knowledge
about internet. It represents inclination for the usage of Internet for
shopping online. Third part of the questionnaire consists of issues involved
in uncertainty and objectives to shop online. The physiographic, emotional,
social, and demographic risks and experiences affiliated with online
shopping. Other questions consist of Internet benefits or damages, which
includes personal Internet support, privacy, flow of data and training
among securing the personal data. It has to examine four groups of
variables (i.e., customer attributes, appropriate factors, perceived
uncertainty factors, and medium/control advance factors) that forecast
three types of online shopping vacillation (i.e., overall hesitation, shopping
cart rejection, and uncertainty at the final payment stage). We found that
different sets of interruption causes are related to different phases of online
shopping uncertainty. The study concludes with suggestion for various
delay-reduction devices to help consumers close their online decision
hesitation. The questionnaire is distributed among the people of different
demographics. Students of HP universities and housewives from Summer
hill. This ensured the validity of the responses and research.

Chapter 4: 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.
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 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 Indias online buying is crossing the overall
global averages.
Factors That Boost Online Shopping in India
Rapid growth of cybercafs 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.

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 26-35year range.
Indian online matrimonial sector is worth around $230 million.
Worldwide e-commerce is only growing at the rate of 28%, since India
being a younger market, the growth of e-commerce is expected at
51% in the coming years.
In line with global trends finally India has also started shopping online
these days. As per the study by IAMAI online shopping in India has
rose from $11million in 1999-2000 to $522 million in 2007 and it is
expected to rise above $700 million by end March 2010.
Indians are also Shopaholics like other Asians. There is a strong
booming young adult population in India with good levels of
disposable income.
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%).
There are over 120 million people online in India and this is expected to
grow to 200 Million by the end of 2010

Chapter 5: Change in Attitude towards Online Shopping

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: Malls malls springing up everywhere and
yet people are e-shopping! And not in small numbers either.
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, Assoc ham 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 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 Indias 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 citys
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. 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.

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

Chapter 6: 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 consumers 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 hs 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.

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

Consumers 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 consumers 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
Consumers intention to shop online refers to their willingness to make
purchases in an Internet store. Commonly, this factor is measured by
consumers willingness to buy and to return for additional purchases. The
latter also contributes to customer loyalty. Consumers 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 consumers purchasing behavior. In
addition, there appears to be an impact on users 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 consumers
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).

Chapter 7: Factors affecting Indian consumers online buying

behavior
India has been gaining importance as a high potential lucrative market for
global retailers. Since the recent economic reforms, Indian consumers have

just begun to understand benefits of using Internet for shopping. However,

the growing number of Internet users has not been reflected to the online
sales. Thus, it is important to identify factors affecting Indian consumers
online buying behavior in order to find the way to stimulate their online
shopping behavior. The purpose of this study is to identify factors affecting
Indian consumers attitude toward shopping online by investigating Indian
consumers risk perceptions about shopping online. Constructs tested
included previously identified factors (convenience risk, product risk,
financial risk, perceived behavior control, return policy, subjective norm,
attitude, and technology specific innovativeness) and Indian-specific
factors (concerns associated with delivery of an ordered product and cyber
laws, shipping fees, and after service) specifically developed for this study.
The concerns associated with delivery of product, social and perceived
behavioral control have been found to be significant factors affecting
attitude toward using Internet for shopping. In terms of gender difference,
perceived risks (product, convenience, financial, and non-delivery) and
technology specific innovativeness were found to be significant for males
and, for females, convenience risk and attitude towards online shopping
were significant factors.
Literature review
Theory of Planned Behavior (TPB)
Theory of Planned Behavior (TPB) explains behaviors over which individuals
have incomplete voluntary control (Azjen, 1985, 1991; Azjen & Fishbein
1980). Attitude toward a behavior and subjective norm Innovative
Marketing, Volume 8, Issue 2, 2012
about engaging in a behavior are supposed to influence intention. Attitude
depicts an individuals feelings, inclination or disinclination towards
performing a behavior. A prospective technology users overall attitudes
toward using a given technologybased system (i.e., Internet) or procedure
represents major determinants as to whether or not he/she will ultimately
use the system (Davis, 1993). Subjective norms reveal the individuals
perceptions of the influence of significant others (e.g., family, friends,
peers, etc.). Others opinions about online shopping as well as online
reviews will influence online shopping behavior. TPB additionally includes
perceived behavior control over engaging in behaviors, suggesting that
human behavioral decision making is affected by the consumers ability to
perform the behavior. The ability to shop online (e.g., Internet accessibility,
credit card ownership, etc.) might refrain a consumer from shopping online.
Diffusion of innovation.

The concept of innovation has received a great deal of attention

particularly in the information technology and marketing research (Agarwal
& Prasad, 1998; Midgley & Dowling, 1978; Rogers, 1995). Rogers (1995)
conceptualized personal innovativeness as the degree and pace of
adoption of innovation by an individual. Consumers who are innovative are
representative as being highly abstract and possess a generalized
personality trait (Im, Bayus & Mason, 2003). Examples as to the levels of
abstraction inherent across the various literatures utilizing this perspective
include a willingness to change (Hurt et al., 1977) and the receptivity to
new experiences and novel stimuli (Goldsmith, 1984; Leavitt & Walton,
1975). The Internet is a fairly new and considered to be innovation that
requires individuals to learn new skills in order to use the technology.
Diffusion of innovation theory is applicable to understanding online
consumer behavior. Consumers who are used to shopping in brick-and
mortar stores may have difficulty in changing habits and shopping online
(Kaufman- Scarborough & Lindquist, 2002). On the other hand, consumers
who have high level of innovativeness may more likely to shop online.
Perceived risks.
Online transaction involves a temporal separation of payment and product
delivery. A consumer must provide financial information (e.g., credit card
details) and personal information (e.g., name, address and phone number)
for delivery in order to complete the purchasing process. Risks perceived or
real, exist due to technology failure (e.g., breaches in the system) or
human error (e.g., data entry mistakes). The most frequently cited risks
associated with online shopping include
financial risk (e.g., Is my credit card information safe?), product risk (e.g.,
Is the product the same quality as viewed on the screen?), convenience
(e.g., Will I understand how to order and return the merchandise?) and nondelivery risk (e.g., What if the merchandise is not delivered?) The level of
uncertainty surrounding the online purchasing process influences
consumers perceptions regarding the perceived risks (Bhatnagar et al.,
2000).
Internet usage in India.
Over the past few decades, the Internet has developed into a vast global
market place for the exchange of goods and services in the world. In many
countries, the Internet has been adopted as an important medium, offering
a wide assortment of products with 24 hour availability and wide area
coverage. Indians use the Internet for e-mail and IM (98%); job search
(51%); banking (32%); bill payment (18%); stock trading (15%); and
matrimonial search (15%) etc. (Feb, 2006 data)

(www.internetworlstats.com). The growth rate of electronic commerce in

India, however, has yet been much below anticipation; its proportion of
total retail business is still small due to its certain limitations (Sylke et al.,
2004). Compared to developed countries (e.g., United States of America),
Indian telecommunications infrastructure is weak. Thus consumers
throughout the country are not as prone to shop online as a more
technologically advanced country (Bellman, Lohse and Johnson 1999;
Bhatnagar et al., 2000; MohdSuki, 2006). Indias low credit card
penetration may be another barrier to online shopping. Finally, Indias
distribution system is unable to provide timely and reliable delivery of
products. This limitation is further exacerbated when the return of products
purchased online is taken into consideration (Bingi, Ali & Khamalah, 2000;
Hoffman et al., 1999; Teo, 2002). In addition, little empirical research exists
regarding Indian online retail market and variables that influence Indian
online consumers purchasing behaviors. Thus it is important to understand
variables that influence Indian consumers online purchasing behaviors.
Previous research suggested that men are more likely to purchase products
and/or services from the Internet than women (Garbarino & Strahilevitz,
2004; Korgaonkar & Wolin, 1999; Van Slyke et al., 2002). Potential gender
difference in identifying factors influencing attitude toward using Internet
for shopping was also examined.
Perceived risks.
Perceived risk refers to the nature and amount of risk perceived by a
consumer in contemplating a particular purchase decision (Cox & Rich,
1964). Before purchasing a product, a consumer typically considers the
various risks associated with the purchase. Many studies have indicated
credit card security, buying without touching or feeling the item (tactile
input), being unable or facing difficulty to return the item, shipping charges
and privacy (security) of personal information as still being the main
concerns of online shoppers (Bellman et al., 1999; Bhatnagar et al., 2000;
Mohd&Suki, 2006). The higher the perceived risk, the consumer may
choose to patronize a brick-and-mortar retailer for the purchase of the
product. Whereas, the lower the perceived risk, the higher the propensity
for online shopping (Tan, 1999). Financial risk is defined as the risk involved
in conducting financial transaction through the internet. Previous research
found financial risk being a primary reason consumers choose not to shop
online (Miyazaki & Fernandez, 2001; Teo, 2002). Consumers are likely to be
hesitant to shop online when they have concerns associated with financial
risks, such as the loss of credit card information, theft of credit card

information, or overcharge (Bhatnagar,

Misra & Rao, 2000; Forsythe &
Shi, 2003). This leads to the development of Hypothesis
1a. Hypothesis 1a: The risk of losing money and financial details will have
negative influence on attitude towards online shopping.
Product risk is defined as the risk of receiving the product that is different
from whats perceived to be in the product description. This could be
resulted from the quality of the retailers product description and the visual
representation of the product, significantly influencing the consumers
ability to understand the product. Inability of physical product examination
and insufficient product information on screen may increase concerns of
consumers. The issues surrounding product risk associated with online
shopping resulted in the following hypothesis. Hypothesis 1b: The product
risk will have negative influence on the attitude of online shopping.
Convenience risk is defined as the discontent comes from shopping via the
Internet. Discomfort in online shopping is associated with the steps
required to complete personal details to processes the check-out forms.
The ease of shopping at the online retailers
Service and infrastructural variables.
Additional challenges for e-commerce diffusion in developing countries like
India are the lack of telecommunications infrastructure throughout the
country (e.g., low computer usage and Internet penetration along with the
lack of qualified staff to develop and support e-commerce sites (Bingi et al.,
2000; Hoffman, 1999). These concerns may no longer be significant
deterrent for online shopping in many developed countries. The concerns
associated with delivery of the product ordered, such as shipping fees,
delayed delivery and/or not receiving a product ordered. This is due to
most Indias postal careers being unreliable except for the government
owned one that is pricey. Thus, online shoppers are forced to choose the
pricey postal career for more secure delivery or to take a risk of not
getting the product delivered when choosing other careers. Hypothesis 1d
was developed considering Indias insecure inefficient delivery system.
Hypothesis 2: The fear of delayed product delivery or not getting it
delivered/losing it in transit will have negative influence on attitude
towards shopping online.
Technology specific innovativeness.
Domain Specific Innovativeness (DSI) is the degree to Which an individual
is relatively earlier in adopting an innovation than other members of his
system (Rogers & Shoemaker, 1971, p. 27). Thus, in the online shopping

context, domain specific innovativeness is defined to be technology

specific innovativeness. Shopping online for the most Indian shoppers
mean going outside their usual shopping routine. While the online shopping
offers consumers a wide breadth and depth of merchandise offerings, it
also requires them to acquire new technology skills in order to seek,
evaluate and acquire products. Research has revealed that online shopping
innovativeness is a function of attitude towards the online environment and
individual personal characteristics (Midgley & Dowling, 1978; Eastlick,
1993; Sylke, Belanger & Comunale, 2004; Lassar et al., 2005). Innovative
consumers are more inclined to try new activities (Robinson, Marshall &
Stamps, 2004; Rogers, 1995). Adoption of online shopping is depiction of
individuals innovative characteristic (Eastlick, 1993). It is expected that
persons technology specific innovativeness has a propensity to shop
online.

Chapter 8: Research Report by Juxtconsult

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. "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 ecommerce. "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.

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 Indias 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:
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,
Mothers 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.

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 its 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.

Bibliography
www.google.com
www.wikipedia.com
www.slideshare.com
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