PROJECT REPORT

ON
Scope Of e-retailing In India

A winter project report submitted on partial fulfillment of the requirements

Of the 2 years M.M.S (2009-2011).
Degree of University of Mumbai.

Submitted by

Vishwajeet Srivastav
MMS - Marketing
2009-2011

ROHIDAS PATIL INSTITUTE OF MANAGEMENT AND

STUDIES
Mahavidyalaya Marg, Navghar, Bhayandar (E), District: Thane,
Pincode: 401105

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 DECLARATION

I Vishwajeet Srivastav student of ROHIDAS PATIL INSTITUTE OF MANAGEMENT

AND STUDIES, studying MMS Course hereby declare that I have completed the project
on Scope of e-retailing in India in the academic year 2009-2011. The information
submitted is true and original to the best of my knowledge.

Signature

__________________

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 Acknowledgement

I would like to heart fully acknowledge my gratitude and thanks to all the
panelists who took active part in accomplishing my project.
At the very outset, I wish to thank Prof.Pravin Akolkar, who helped me to choose
such an interesting topic to work upon as a full fledged project and guiding me at each
step interacting with him gave me a completely different view to look at a subject,
throughout its completion.
I am also thankful to all the faculty of my institute, who helped me in giving all
the required information in a very cooperative manner. The project would not have been
possible without the help of my friends and colleagues who have been patient enough
with me.

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 Table of contents

CHAPTER CONTENTS PAGE

Chapter 1 INTRODUCTION 7
1.1 Introduction to research topic 7
1.2 Overview of the industry in general 9
Chapter 2 RESEARCH DESIGN 25

2.1 Statement of the Problem 25

2.2 Significance of the study 25

2.4 Objectives of the Study 26

2.5 Sampling methods used 26

2.6 Tools for data collection and analysis 26

2.7 Design of the study 26

2.8 Limitations 27
Chapter 3 INDUSTRIAL PROFILE 28
Chapter 4 ANALYSIS & INTERPRETATION OF DATA 39
Chapter 5 SUMMARY OF FINDINGS, 50
SUGGESTIONS&CONCLUSIONS
BIBILIOGRAPHY 54
ANNEXURE 56

Executive summary

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 In India E-retailing is still a relatively unknown and unused entity, but with the
governments open attitude towards progression, lot of infrastructure is dedicated to this
area. The most tables of industries, the most focused of business models, and the
strongest of brands can be blown to bits by new information technologies. It can come
from nowhere and demolish brands & business that have been established for decades,
ever centuries.

In India where the internet users are growing at an alarming rate it will be helpful
for the consumer as well as for the companies, to discuss on e-retailing models, payment
methods, security features, future trends and benefits etc. this makes the study on Scope
of e-retailing in India necessary. Predictions made on this study can be used as a basis to
foresee the future level of business.

Even though the government of India has taken positive measures to facilitate the
speedy growth of E- retailing by the introduction of cyber laws, reduction of taxes on
infrastructure etc people are hesitating to buy on lines due to confusions on security and
payment methods. There are also frauds taking place in credit cards which can happen
while it on the internet. Inadequate infrastructure and excessive tariffs also make the
situation worse.

The major objectives of the study are,

To find the factors that amount to the growth of e- retailing in India.
To find out the challenges of e-retailing in India.
To find out the target group in on line selling.
To find out some of the E- retailing myths

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 Questionnaire method is used to collect primary data. Simple random sampling
method is used to collect the data in the same regard. Analysis is also done on the
secondary data that are collected from past records, companies, Internet and other
journals and publications.
Questionnaire was distributed to people in and around Bangalore city. The
respondents were mostly students, officers, and house wives who had access to the
net.

Some of the findings are that the average literacy factor and the cultural factors
are important in e-retailing. The growth of e-retailing in India would be directly
proportional to the penetration of the internet.

The conclusion says that the infrastructure cost should be decreased and more
private ISPs must come with more band width. The trend we see in the current
scenario makes us to think that there is great scope for e-retailing market.

Chapter 1

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 Introduction
1.1 Introduction to research topic

E- Retailing an overview

Electronic retailing (also called e-tailing and Internet retailing) is a retail format
in which the retailer and customer communicate with each other through an interactive
electronic network. After an electronic dialogue between the retailer and customer, the
customer can order merchandise directly through the interactive network or by telephone.
The merchandise is then delivered to the customers address.

The World Wide Web can serve one or more of these roles for a retailer

Project a retail presence.

Generate sales as the major source of revenue for an online retailer or as a
Complementary source of revenue for a store-based retailer.
Enhance the retailers image.
Reach geographically dispersed consumers including foreign ones.
Provide information to consumers about the products carried, store locations,
usage Information, answers to common questions, customer loyalty
programmes and so on.
Promote new products and fully explain and demonstrate their features.
Furnish customer service in the form of E-mail, hot links, and other communications.
Be more personal with consumers by letting them point and click on topics they
choose.
Conduct a retail business in a cost efficient manner.
Obtain customer feedback.
Give special offers and send coupons to web customers.
Describe employment opportunities.
Present information to potential investors, potential franchisees and the media.

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 The role assigned to the web by a given retailer depends on whether it is
predominantly a traditional retailer that wants to have a web presence or a newer firm
that wants to derive most or all its revenues from web transactions.

In India Non-Store retailing represented by direct selling and etailing is

estimated at Rs 1,100 crores. Only 19 percent of all retailers have an e-retailing initiative.
The number of retailers with plans to e-tail within one year and those with no plans are
almost equal. Significantly, 10 percent of the retailers have discontinued their e-retail
initiatives. The main reasons for retailers to stay away from e-tailing are predominantly
non-viability of business and resource constraints. It is estimated that 5 percent or more
of retail sales of goods and services such as apparel, banking, books, computer hardware
and software, consumer electronics, gifts, greeting cards, insurance, music,
newspapers/magazines, sporting goods, toys, travel and videos will be made online. In
the case of products where it is difficult to provide touch and feel information
electronically, such as clothing, perfumes, flowers and food electronic retailers may not
be successful. Branding may help overcome many of the uncertainties in purchasing
merchandise without touching and feeling it. For example, if customers purchase a size
30inch waist / 32-inch inseam pair of jeans, they know they will fit when bought from
an electronic retailer. In some products and services, such as traveling or hotels,
electronic retailers might even be able to provide superior information compared to store
retailers. The critical issue related to selling successfully for electronic retailers is
whether they can provide enough information prior to the purchase and make sure the
customers will be satisfied with the merchandise once they get it. There are many buying
situations in which electronic retailers can provide sufficient information, even though
the merchandise has important touch and feel attributes.

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1.2 An overview of industry in general
Powering the Reinvention of Retailing

Growth of e-retailing hinges on the last mile,

When looking at potential growth for online retailing, most analysts look at the
number of consumers who are online, what online merchandising they respond to and
what marketing it takes to make them repeat buyers. Chicago-based consultant Lauren
Freedman has one word for them: Fulfillment. How do we grow this business if people
arent home to receive their purchases when they are delivered? says Freedman,
president of The E-Tailing Group Inc. Not everyone can receive their deliveries at
work.

E-retailing Myths:

The common myths earlier were that online selling required low investment
and low cost and hence had no entry barriers and it was easy to succeed. There are four
B2C myths that can be misleading while managing e-commerce operations.

1. Stickiness is good: Many sites aspire to keep customers on the site as long as possible
by adding features and design navigation. They have too many sequential clicks through
pages and save the best page for the last. On the contrary it is observed that when it
comes to e-commerce sites, the customers would rather complete their purpose than
unnecessarily waste a lot of time on a site when looking for a particular product.
Therefore, a site should have an introductory home page, offer speed navigation, vividly
describe product benefits, update displays regularly, provide expert information and price
competitively.

2. More is better: Some sites try to attract customers with flashy technology by
bombarding them with fancy graphics, animation and sound effects. But fancy visual and

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sound effects slow sites to a crawl. A recent survey from Jupiter Media Metrix found that
visitors were twice as likely to return to a site with faster loading pages as they were to
sites that provide rich media. The Jupiter survey also found that 59 percent of those
surveyed would be more likely to return to a site that offered more product information.

3. Personalization drives profitability: Personalization was supposed to be the killer

application of B2C. But personalization is just one of the merchandising techniques that
e- commerce sites should consider for incremental sales improvement but per se it does
not help to complete sales. This is because customer actions dont always reflect their
interests. For example, a customer may have bought a book on baseball as a gift for his
brother-in-law, a sports fan. But the customer dislikes sports himself. However, that does
not stop the site from continually calling the customers attention to books on baseball,
football, basketball and the like. It is recommended that instead of investing in expensive
personalization technology sites they would be better off devoting their energies to proper
merchandising by answering questions and having items logically arranged.

4. You can sell anything on the web: One can sell many products like CDs, books, gifts,
online. But certain products arent a good fit for e-commerce sales, either due to legal
restrictions like in the case of alcohol, or the customers need to touch and feel the product
or try an expensive piece of apparel to make sure it fits. Sometimes the discounted price
shoppers find on the Web may not offset the hefty shipping charges for large, heavy
items such as an oven or Jacuzzi. Although, in the case of such products one may not be
able to complete the transaction on the Web but it can assist the sale. The web-site can be
used to inform customers about these items and direct them to an appropriate sales
channel, like its stores or distribution network.

5. Some common myths now are that e-commerce entails high cost and hence is not
viable. E-commerce is undoubtedly a high investment business requiring substantial
investment to set up the web site, the software for data capture, records and interactive
systems for customer dialogue. These are sometimes underestimated and often cause

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downfalls. But they are investments like any bricks and mortar business; only the heads
under which they are made are different.

6. Another myth is that e-commerce cannot make money. But e-commerce can be
made profitable by generating volumes to make money and given time to mature and
taking up the challenge to change customer behavior. However, it cannot be a gold mine.

7. According to the Ernst & Young Global Online Retailing report, the main reasons
that non buyers dont buy online are: they are uncomfortable sending credit card
information, preference for seeing the product before purchasing, no existence of credit
card, and insufficient information about products to make decisions, lack of confidence
with online merchants and limitation of talking to the sale person. In addition, the main
concerns of online buyers are overly high shipping costs; need to try for fit in the case of
apparel, high prices, inappropriate for large, perishable and luxury items, need to feel and
see and concern of privacy. The report also charted that 3 biggest barriers consumers
feel hinder their online shopping experience is price, security and ease of navigation.

8. The e-tailers have high fulfillment of costs (which can be as high as US$16 an order
for most dotcom e-tailers) and lack of scale makes the business unprofitable.

9. Poor inventory management also causes major losses for many dotcoms. This fact
along with inexperienced merchandising teams, brutal price competition, inefficient
product return systems, result in poor gross margins for online only players.

10. High marketing costs: Experienced offline brands spend about 18% less than
startups on establishing retail websites. E tailer-marketing costs are high. Online rent,
a term for the price of time and space on media channels for on-and offline brand
marketing, has inflated hugely over the last decade of the twentieth century. According to
Thomas Weitzel Partners (August 1999) where a superstore spends an average of
US$2.50 promoting a product, e-retailers spend US $17.29 per product.

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11. Online customer acquisition costs: Most consumers still need to be persuaded to go
online and at the same time almost all e-retailers lose money on every customer. Their
customers generate too few orders and too little profit per order to cover the costs of
winning them, which can be as high as 65% per order. According to a study by The
McKinsey Quarterly in July 2000, for e-tailers to achieve comfortable contributions on
each transaction, they would need efficient order fulfillment processes, average orders of
at least US$100 and gross margins of at least 25%.

Factors Affecting the Growth of Electronic Retailing

Three critical factors affecting the adoption of a new innovation such as

shopping electronically are (1) the ease with which customers can try the innovation, (2)
the perceived risks in adopting the innovation, and (3) the benefits offered by the
innovation compared to the present alternatives.

Trying Out Electronic Shopping:

In September 2002 about 605.60 million around the world had access to the
Internet. Majority of these web surfers were living in Europe, followed by Asia/Pacific,
Canada & USA, Latin America, Africa and the Middle East. According to the United
Nations Conference on Trade and Development (UNCTAD report) Internet usage is
seeing an annual rise of about 30-percent which is equivalent to about 2.5 percent of the
global population. A growing share of new internet users is in developing countries,
which accounted for nearly a third of all new Internet users worldwide in 2001. Already
Asia, excluding Japan and the Republic of Korea, added almost 21 million new users to
the Internet in 2001, more than North America. With 77 million people under 18 expected
to be online globally by 2007, teenagers and children constitute one of the fastest
growing Internet populations, Surfing the net is a highly regarded activity by this age
group. However, adults over 50 years old are one of the fastest growing markets on-line.

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A large number of this age group has home access to the Internet. Studies have revealed
that older people are receptive to new technology and have time, money and enthusiasm
to surf the web regularly. Apart from staying in touch with far-flung family and friends,
the older people tend to purchase merchandise and services online because shopping in
stores can be difficult for them.
Perceived Risks in Electronic Shopping

Technological developments are reducing the risk of electronic shopping by

enabling secure transactions and increasing the amount and quality of information
available to electronic shopper. However, security of the credit card transactions remains
one of the major concerns, especially in developing economies. Entertainment and Social
Experience: All non-store retail formats are limited in the degree to which they can
satisfy these entertainment and social needs. In-store retail formats score high on this
account. They provide more benefits to consumers in terms of entertainment and social
experience than simply having merchandise readily available and helping them to buy it.
Even the most attractive and inventive web pages and video clips will not be as exciting
as the displays and activities in a Disney or Toys R Us store due to their interactivity.
In the case of store-based retail formats the delivery time of getting
merchandise is immediate. But in the case of non-store retail formats consumers usually
have to wait several days to get merchandise, especially when the goods are of a
perishable nature and bought prior to an occasion. Number of alternatives:

The biggest benefit of electronic retailing compared to other retail formats is

the vast number of alternatives that become available to consumers. For example, a
person living in India can shop electronically at Harrodss in London in less time than it
takes to visit the local supermarket. However, it does have limitations. Shoppers may
visit all the sites selling the product. This may be a time consuming exercise unless the
consumer is focused and finds a few items that they might like to study in detail. A more
significant potential benefit of electronic retailing is the ability to have an electronic
agent to select a small set for the customer to look at in detail. Service oriented retailers

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score higher on this account as their salespeople know what their preferred customers
want and help indecision making by limiting the choice.

Cost of Merchandise:

Since electronic retailers do not have to spend money building and operating stores
at convenient locations, they have much lower costs, as much as 25 percent lower than
in-store retailers. But the electronic retailers or the customers will have higher costs to get
the merchandise to homes, deal with the high level of returns and attract customers to
their website. It is quite costly to deliver merchandise in small quantities to customers
homes. Customers presently incur these costs when they spend their time and money
going to stores to pick out and take home merchandise and then going back to the stores
to return the merchandise they dont want.

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E-TAILING CHALLENGES

1. Zero error operations

A study by Boston Consulting Group in the United States and Canada in 1999
showed that 57% of Internet users have shopped online and 51% actually purchased
goods or services online. The typical online purchaser completed ten transactions and
spent $460 online over the previous twelve months. Yet 28% of all attempted online
purchases failed, and four out of five consumers who made purchases online experienced
at least one failed attempt over the same period. These failures resulted from technical
problems consumers encountered with the sites, difficulties in finding products and
logistical and delivery problems after the sale. Twenty eight percent of consumers who
suffered a failed purchase attempt stopped shopping online and 23 % stopped purchasing
at the site in question.

Frequently Asked Questions (FAQs): This is a self-service option that relies on

information stored in a database to assist customer transactions and provide answers to
common questions that are asked by customers. This database is continually built over
time and new customers and answers are added, based on knowledge gathered from
earlier customer interactions. Call Us Buttons: Call-us buttons appear on the website
pages, allowing the customer to call the customer support representative on a regular
phone via the web. PCs that are equipped with speakers and a microphone may take
advantage of voice-activated websites that send voice over Internet using VoIP
technology. Another variation to the same option is call-me buttons, where the customer
can request the customer representative to call back, though this may force the customer
to go offline.

Text Chat: Text chat over the net allows a client to send a question and receive a real
time written response. This allows almost instantaneous communication with more than
one customer at a time or in a group. Depending on how it is implemented, it may appear
to be slow to some users. Collaboration/Co-browsing: Web collaboration technology
allows a customer support representative and the customer to share the same screen so

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that the representative can see exactly what the customer is doing. This type of interaction
will help the support representative solve a problem if the customer is stuck at a certain
place on the website. On the other hand co-browsing offers the capability where more
than one person can browse a site together, with one of the users doing the driving while
the other has secondary control. This type of interaction will provide the representative
with capability to handle a customer who seems lost on the website.

E-Mail Management: email systems should be fully automated using artificial

intelligence (AI) or other new technologies that help the e-tailer to deliver an instant
automatic reply based on key words or FAQs. E-mail systems can automatically route e-
mails to a call centre, where a customer support representative can review the suggested
computer-generated response or can prepare a new response before it is sent to the
customer.

Call Centers: Plain old call centers should be enhanced to support calls from online
customers as well as catalogue shoppers. Earlier, the call centers had to be confined to a
geographic area or country to provide the best support, with the Internet, the call centers
can be spread across multiple countries to provide the same, or better, quality of support
and reduce the cost of providing the support.

2. Increased Gross Margin:

Every retailer ideally wants to have high value, high margin and fast moving products.
But that is often not possible. The products that fetch the most money may not be the
products that the customer wants to buy. Therefore retailing is ultimately about being able
to find a balance. E-tailers need to pay attention to gross margin return on investment. For
example, if a 25 percent margin category
sells six times a year and a 15 percent one sells 12 times a year, it is better to go with the
latter. Therefore getting the right product mix is critical to retailing. An e-tailer should
also try to cut down the direct costs by achieving distribution efficiencies.

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3. Customer Acquisition:
Gaining information about customers and potential customers and converting such needs
into demand is more feasible in electronic commerce than any other marketing channel.
The Internet allows e-tailers to gather huge amounts of information about their customers
easily. They can use this information for personal pricing and customer specific targeted
promotions. It might also be used to directly offer customers related products, either in
real time during the on-line shopping process or by e-mailing them with special offers.
This possibility offers benefits for customers. It is a convenient opportunity to get to
know new products they would like to buy without having to look for information in
many places.

Educate: As a rule, the more potential customers know about the product or services the
e-tailer is selling, the more theyre likely to buy. Education does not only have to be
about the product but also of the e-tailers business, quality assurance and processes.

Guarantee: Any purchase represents a risk to the buyer. The risk may be of paying much
more than what its worth or the item may not look as good at home as it does on the web
site. The e-tailer should not only eliminate the risk but also reduce the customers
perception of risk by having risk-free return or exchange policies.

Manage Expectations: The e-tailer will need to manage customers expectations so that
they are not disappointed or frustrated by the shopping experience. The expectations may
be as simple as those about availability of the item or shipping time or the total cost.

4. Generating customer traffic:

E-tailers adopt one of two approaches to generate traffic: Impulse Driven and Serious
Shopper Approach. Impulse purchases are defined as purchases that signify with high
emotional activation, low cognitive control and largely reactive behavior. This occurs
when consumers experience a sudden and often powerful and persistent urge to buy
something immediately even though they she had no prior intention of doing so. Under
this approach the e-tailer generates high traffic. The more often a customer visits a site,

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the more likely they are to spend an increasing amount of money and thus generate
profits for the e-tailer. For instance, in apparel, the average repeat customer spends 67%
more overall in the third year of shopping relationship with an online vendor than in the
first six months. And over three years, customers referred by online grocery shoppers
spent an extra 75% above what the original shopper spent. Products that are generally
bought on impulse purchases usually have several of the following characteristics:

Their price is considered average or acceptably low enough by the consumers;

They are low involvement goods;
They are related to entertainment activities and hobbies;
They are used as gifts to friends and relatives;
They are considered trendy or popular items;
They are personalized versions of common products;
They are related to holidays or important festivals or occasions

Low touch:

Most products likely to be bought on an impulse do not require touching or

tying on which makes them appropriate for on-line retailing. Dynamic displays:
customers can be presented with such products while navigating through the online shop;
different items can be shown on each page to maximize the likelihood of purchase; items
which are related or complimentary to those in the section of the catalogue currently
viewed can be displayed.

Personalized displays: on line technology allows personalizing the items

advertised to the customer during navigation which can be done based on the customer
preferences or demographic information (if membership is an option) or purchase history.
Personalized reminders: members or previous customers can be sent or presented
reminders about coming holidays or popular items (best sellers) in categories they have
expressed interest or made purchases in, in the past. Personalization opportunities:
customers can easily be presented with opportunities to personalize common products
(e.g. print a name on a cup) that can initiate impulse purchases.

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 Advanced visualization techniques: graphics technology (animation, sound / image
effects) gives many opportunities to present a product in a way that will impress the
consumer and motivate them to buy it. Purchase expediting: on line retailing allows on
click purchasing (for registered customers or members) which leaves virtually no time for
second thoughts or reasoning about the purchase of product.
In case of the Serious Shopper Approach, the e-tailer builds a relationship based
on service levels and quality of products. The e-tailers have to proactively anticipate and
handle consumer expectations and ensure that whats being delivered is better than what
users expect. So retailers constantly need to analyze their product/service categorys
relationship with consumers and ensure that their own business isnt becoming
disconnected from general expectations.

5. Customer Retention
E-business is redefining the way the e-tailers manage customer relationships and
place new demands for customer support throughout the sales cycle and thereafter. This
task has been made more complex by individualization of customers. The e-tailers cannot
afford to ignore even an individual customer because word -of- mouth spreads very fast
on the Internet. User groups, communities, web chat and e-mail each have enough
individual power to drain away revenues or create bad publicity. Only personalize
support and sophisticated customer interaction can help the e-tailer convert more
browsers into buyers, resulting in higher revenues per customer. Also, it costs about five
to eight times more to acquire a new customer than to keep an existing one. Therefore, it
is essential for the e-tailers to build loyalty, aim to achieve zero error operation, to create
continuing excitement at the stores and have a mix of impulse and need based products to
induce customers to visit the site often. Some notable consumer-driven e-commerce site
content already in use:
I. Testimonial pages: Testimonials are a powerful tool to establish credibility, which is
especially important for a website in the early stages of existence
and/or in the early stages of developing any individual consumer
relationship. A web site can also request feedback for testimonials
from happy customers and opinion leaders.

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ii. Awards: This is another credibility tool as well as a tactic to increase traffic.
Iii. Extensive and useful links or resource pages.
iv. Contests, sweepstakes, sign-ups to get visitors to voluntarily opt for future
marketing Efforts targeting their specific consumer interests.
v. Information: according to an MSN Sidewalk survey, 74% of Internet users seek
Information
vi. Reviews/ Opinions, especially product related.
6. Earning Customer E-loyalty

Customer loyalty is a key driver of profitability for on line companies.

Consumers are motivated to buy more goods online when security features were
enhanced and personal information kept private. Increased loyalty can bring cost savings
to a company in many ways: lower marketing costs, lower transaction costs (such as
contract negotiation and order processing), customer turnover expenses and lower failure
costs such as warranty claims and so on.

7. Managing Technology

In e-tailing business, size is no longer a determining factor for success. The

critical metric is the speed of decision-making, customer service, response time, etc
which are all shortening, owing to the technological revolution. Up-to-date, intelligent
and user-friendly technology also communicates professionalism, a vital quality in
building trust. Indian retailers are gradually but steadily upgrading their IT infrastructure.
Companies are willing to increase their IT spending from 1 percent of sales at present to
5 percent and expect clear benefits in vital areas like inventory management and
customer interfaces. In India, Shoppers Stop has one of the most advanced IT systems in
place. In a recent Economic Times survey the company was recognized as among the
most IT-savvy companies in India. It has already pumped in over 10 crores in to IT
systems - merchandise management systems, inventory management, CRM package etc,
and have futuristic plans to continue its spate of investments. The main aim of the
company is to see that the time spent by their merchandisers on mundane functions is
minimized and they can spend more time on strategy related issues. However, e-tailers
should not fall prey to becoming a slave to technology. In the aftermath of the dotcom

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blowout and the downturn in the economy e-tailers are reviewing strategies, processes
and questioning IT spending as they strive to improve performance and boost profits in a
difficult economic climate. It is more critical to have a robust, reliable and scalable
software platform than have bells and whistles. Therefore e-tailers should not try to
attract customers with flashy technology with fancy graphics, animations and sound
effects but should offer more product information. A recent survey found that visitors
were twice as likely to return to a site with faster loading pages as they were to sites that
provided rich media. It also found that percent of those surveyed would be more likely to
return to a site that offered more product information.

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 Channel Comparison

Bricks-and- Catalog Retail e-Retail

Mortar Retail
Physical Print materials Location is the Web
Location and
buildings address, available
presence "Portable store"
branded and globally through
easily identified any Internet
Sent to targeted
and found connection
mailing lists

Most traditional Can establish a

and oldest presence through
location for retail partnerships and
cross-promotions
Commands
(links between sites)
attention in the
retail landscape
Use of store Page layouts Web page layout
How
space and "fix
merchandising is Organization of Relationship
Turing"
accomplished catalog between product
Signage and and text
Relationship
other product
between product Signage and other
information tools
and text product information
tools

Category, search,
and sorting
mechanisms

Interactive product
locators

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 Bricks-and- Catalog Retail e-Retail
Mortar Retail

Options for Pricing strategies Pricing strategies Pricing strategies

promotional and campaigns and campaigns and campaigns can
activity can be can be be implemented
implemented on a implemented "instantaneously,"
daily basis only as depending on
frequently as new internal
catalogs are organizational
distributed constraints

Options for Product must be Product is held at Multiple inventory

inventory available at warehouse until ownership options,
multiple store ordered and with most
locations to shipped to prominent being
maximize customer traditional, "just-in-
purchasing time," and a hybrid
opportunities of the two
(with the
exception of
products intended
for special order)

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E-Retail + Traditional Retail Operations

Sites like macys.com and gap.com, as well as relative late comers walmart.com
and jcpenney.com, are evolving into online branches of brick-and-mortar operations. This
kind of site is not limited to the rich, famous, and nationally well-branded. Many smaller
stores have used the Web to broaden their market by opening online branches, which
make available to Web shoppers goods that were once accessible only to people near the
store.

The inverse image of this model is also evident: businesses that started out as
Web e-retailers but have since added brick-and-mortar operations to their sales channels.
Gazoontite.com launched its Web site selling hypoallergenic products before opening its
flagship store in San Francisco. Additional stores have opened on both coasts and in the
Chicago area. Originally intended to reinforce the site's branding and credibility, the
brick-and-mortar operations have proven to be a huge success, even as the e-retail site
has stopped selling.

E-Retail + Catalog Operations

In this category are well-known catalog merchants like Lands' End, which has
expanded its popular direct merchant business through landsend.com. For catalog
retailers, expansion to the Web is a relatively easy development. They already conduct
most of their sales through remote media and are already equipped to handle customer
service and order fulfillment.

This model also has an inverse, in the form of dot-coms that have added print
catalogs or other print sales tools to their online site offerings. Print sales tools can serve
as a tangible reiteration of an e-retail brand and its product offerings. Garden.com, for
example, added a print catalog to the many merchandising techniques the company uses
to drive sales at its Web site.

24
E-Retail + Web Site Content

Selling goods is a complementary component of business for these sites, which

may rely on other sources of revenue for some portion of their business. Other
components may include community building, editorial and informational content,
product reviews, and recommendations or other features to draw users to the site.

The combination of targeted information and retail is a powerful one that cannot
be easily replicated offline. To be sure, many traditional retailers of all kinds offer their
customers print newsletters, loyalty programs, educational opportunities, and more.
However, the Web uniquely enables customization of that content, allowing customers to
pull from the site exactly the content they want and need, when they want it, and, many
times, in the form they want it. From the e-retailer's perspective, this customization is
automated; the company need not employ envelope stuffers to select and mail the
appropriate materials to a customer on a regular basis. From the customer's perspective,
this feature creates the experience of becoming a "market of one," with a direct
relationship to the retailer.

Content and e-retail sites may mix their revenue streams in a variety of ways
with any number of tools such as membership programs, advertising, sponsorships, retail,
subscriptions, and syndication of content. Affiliate programs, which credit a referring
Web site for sales made through the site, can make almost any site a de facto e-commerce
site. For the purposes of this book, we considered sites that rely on product sales of 50
percent or more of their revenues.What format best suits your business? What sales
channels will prove successful for you? The balance between Web sites, brick-and-mortar
stores, and catalogs depends on your retail strategy, goals, and budget. Although our
focus throughout the book will be on the Web-based retail operation, take some time to
consider whether additional sales channels make sense for your product, market, and
unique selling proposition

25
 Chapter 2

DESIGN OF THE STUDY

2.1 STATEMENT OF THE PROBLEM

Even though the government of India has taken positive measures to facilitate the
speedy growth of E- retailing by the introduction of cyber laws, reduction of taxes on
infrastructure etc people are hesitating to buy on lines due to confusions on security and
payment methods. There are also frauds taking place in credit cards which can happen
while it on the internet. Inadequate infrastructure and excessive tariffs also make the
situation worse.

2.2 SIGNIFICANCE OF THE DESSERTATION

In India E-retailing is still a relatively unknown and unused entity, but with the
governments open attitude towards progression, lot of infrastructure is dedicated to this
area. The new economics of information can transform business definitions industry
definitions and competitive advantage. The most tables of industries, the most focused of
business models, and the strongest of brands can be blown to bits by new information
technologies. It can come from nowhere and demolish brands & business that have been
established for decades, ever centuries.

In India where the internet users are growing at an alarming rate it will be helpful
for the consumer as well as for the companies, to discuss on e-retailing models, payment
methods, security features, future trends and benefits etc. predictions made on this study
can be used as a basis to foresee the future level of business.

26
2.3 OBJECTIVES OF THE STUDY

To find the factors that amount to the growth of e- retailing in India.

To find out the challenges of e-retailing in India.
To find out the target group in on line selling.
To find out some of the E- retailing myths

2.4 SAMPLING METHODS USED

PROBABILITY APPROACH: - Since every unit in the sampling frame has an

equal chance of being included in the sample probability approach is used.

PROCESS: - A rigorous random selection process is undertaken to rule out the

bias occurring on account of sampling. The sampling frame is serialized and then
subject to a random number table selection of the sampling units is made.

2.5 TOOLS FOR DATA COLLECTION AND ANALYSIS

Questionnaire method is used to collect the primary data. Simple random

sampling is used to collect primary data. Each unit in the population has an equal chance
of being included in the sample. The technique of exploratory data analysis is used to
make predictions till the year 2012 by finding the growth rate.

2.6 DESIGN OF THE STUDY

a) Secondary data collection
b) Analysis of secondary data
c) Find the gaps in information in the secondary data
d) Data collection through questionnaire method
e) Analysis of primary data
f) Prepare the final report

27
2.7 LIMITATIONS

Time and cost constraints restricts the survey some extent.

The findings of the study will be based on the information provided by

respondents and hence may be biased.

28
 Chapter 3

Industrial profile

India as an emerging market for global retailers

Standing on the threshold of a retail revolution and witnessing a fast changing

retail landscape, India is all set to experience the phenomenon of a global village. India
presents a grand opportunity to the world at large, to use it as a business hub. A 'Vibrant
Economy', India tops A T Kearney's list of emerging markets for global retailers. The 2nd
fastest growing economy in the world, the 3rd largest economy in terms of GDP in the
next 5 years and the 4th largest economy in PPP terms after USA, China & Japan, India
is rated among the top 10 FDI destinations.

With a stable Government with 2nd stage reforms in place, India can be
reasonably proud of having put in place some of the most widely accepted Corporate
Ethics (Labour Laws, Child Labour Regulations, Environmental Protection Lobby,
Intellectual Property Rights, and Social Responsibility) and major tax reforms including
implementation of VAT, all of which make India a perfect destination for business
expansion.

The Retail Evolution

With escalating consumerism, unprecedented awareness, and a youth-heavy

customer base, India is the 'Promised Land' for the Global brands and retailers. Faced
with fast saturating Western markets they are beginning to recognize the Indian consumer
mass as the world's most probable unexplored gold mine.

A T Kearney's Global Retail Development Index' gives a clear message to global

retailers on India: Move now or forego prime locations and market positions that will
become saturated quickly. Global retailers that missed out on capturing first-mover
advantage in China can make up for it in India. The retail market is changing fast, along

29
with the lifestyles and buying habits of India's burgeoning population. As people look for
ways to spend their money, global retailers should be looking for prime locations

Investments

A report by investment banker Goldman Sachs, credits India with the potential to
deliver the fastest growth over the next 50 years. According to Standard & Poor's, foreign
direct investment (FDI) to India is likely to grow the fastest in next few years. As targeted
FDI is to hit $13 billion in the 12 months ending March 2007, more than double India's
previous best of $5.5 billion hit in the previous year.

India is investing over US $130 billion in infrastructure by the end of this decade.
Indian retail industry itself has attracted investment of over INR 200 billion (over $4
billion) in creating infrastructure, systems & shop-fit. The additional retail space is
expected to add INR 300 billion ($ 6.67 billion) of business to organized retail.

The Indian Consumer

With the largest young population in the world - over 890 million people below
45 years of age! India is indeed a resplendent market. India has more English speaking
people than in the whole of Europe taken together. Its 300 million odd middle class, the
"Real" consumers, is catching the attention of the world. As the economy grows so does
India's middle class. It is estimated that 70 million Indians earn a salary of over INR
800,000 ($18,000) a year, a figure that is set to rise to 140 million by 2011. The number
of effective consumers is expected to swell to over 600 million by 2010 - sufficient to
establish India as one of the largest consumer markets of the world.

Private Consumption & Retail

With the changing face of retail, the Indian consumer is in for a rapid
transformation. While the consumer spending continues to grow at double digit figures,

30
leading retailers have recorded an increase in sales between 50 to 100 percent in the
calendar year 2006 over the previous year.

According to India Retail Report 2007, the total private consumption touched
INR 20,000 billion (US $ 445 billion) at current prices in the calendar year 2006 with
organized sector accounting for INR55,000 crore ($12.4 billion) business increasing its
share to 4.6 per cent of the total Indian Retail Value that stood at INR12,000 billion ($270
billion). Moving forward, organized retailing is projected to grow at the rate of about 37
per cent in 2007 and 42 per cent in 2008. Organized retail in India has the potential to add
over INR 2,000 billion ($45 billion) business by the Year 2010.

Opportunity for Global Players

Favorable demographic and psychographic changes relating to India's consumer

class, international exposure, availability of quality retail space, wider availability of
products and brand communication are some of the factors that are driving the retail in
India. Over the last few years, many international retailers have entered the Indian market
on the strength of raising affluence levels of the young Indian population along with the
heightened awareness of global brands, international shopping experiences and the
increased availability of retail real estate space.

Retail Formats

The term retail institution refers to the basic format or structure of a business.
Classification for Retail institutions is necessary to enable firms to better understand and
enact their own strategies: selecting an organizational mission, choosing an ownership
alternative, defining the goods/ service category and setting objectives. The classification
is not mutually exclusive; that is, an institution may be correctly placed in more than one
category. For example, a department store unit may be part of a chain, have a store-based
strategy, accept mail order sales, and have a Web site. These are commonly used
typographies. They are likely to vary between countries. For instance, a Kirana store in
India or car boot sales in the UK. Ownership Based Retailing is one of the few sectors in
our economy where entrepreneurial activity is extensive. Although retailers are primarily

31
small (80% of all stores are operated by firms with one outlet and over one-half of all
firms have two or fewer paid employees), there are also very large retailers. Retail firms
may be independently owned, chain owned, franchisee operated, leased departments,
owned by manufacturers or wholesalers, consumer owned. From a positioning and
operating perspective, each ownership format delivers unique value. Retail executives
must work on the strengths and weaknesses inherent in each of these formats to be
successful.

1. Independents

An Independent retailer owns a single retail unit. In the United States, they
account for nearly 80 percent of total retail establishments and firms generate just 3
percent of total U.S. store sales. One half of all independents is run entirely by the owners
and/or their families and has no paid workers. The high number of independent retailers
is associated with the ease of entry into the marketplace, owing to low capital
requirement, no or relatively simple, licensing procedures. The ease of entry into retailing
is reflected in the low market shares of the leading firms in many goods /service
categories as a percentage of total category sales. For example, in the grocery store
category where large chains are quite strong, the five largest grocery retailers account for
only about 22 percent of sales. A similar large format in India contributed to less than 3%
of total retail sales. The Indian retail market has around 12 million outlets and has the
largest retail outlet density in the world. However, most of these outlets are basic mom-
and-pop stores with very basic offerings, fixed prices, and no ambience.

2. Chains

A chain retailer operates multiple outlets (store units) under common. In

developed economies, they account for nearly a quarter of retail outlets and over 50
percent of retail sales. Retail chains can range from two stores to retailers with over 1,000
stores. Some retail chains are divisions of larger corporations or holding companies. The
select large retail chains in India are shown in Annexure-I Chain Retailers have several
advantages. They enjoy strong bargaining power with suppliers due to the volumes of

32
purchases. They generally bypass wholesalers. Many of them buy directly from the
manufacturers. Suppliers service the orders from chains promptly and extend a higher
level of proper service and selling support. New brands reach these stores faster. Most of
these chains sell private. Chains achieve efficiency due to the centralization of purchasing
and warehousing and computerization. Wider geographic coverage of markets allows
chains to utilize all forms of media. Most of the chains invest considerable time and
resources in long term planning, monitoring opportunities and threats. Chain retailers
suffer from limited flexibility, as they need to be consistent throughout in terms of prices,
promotions, and product assortments.

3. Franchising

Franchising is a contractual agreement between a franchiser and a franchisee

that allows the franchisee to operate a retail outlet using a name and format developed
and supported by the franchiser. Approximately one third of all U.S. retail sales are
made by franchisees. In a franchise contract the franchisee pays a lump sum plus a
royalty on all sales for the right to operate a store in a specific location. The franchisee
also agrees to operate the outlet in accordance with procedures prescribed by the
franchisers.

4. Leased Department

A Leased Department is a department in a retail store rented generally by a

manufacturer. The lessee is responsible for all aspects of business and pays the store a
rent. The store may impose operating restrictions for the leased department to ensure the
overall consistency. The leased departments choose to operate in categories that are
generally on the fringe of the stores major product lines, such as in-store beauty salons,
banks, photographic studios and food courts. Leased departments help the stores in
generating greater traffic and providing one stop shopping. They benefit from expertise of
lessees in personal management, merchandise displays, the recording of items, as store
personnel might lack the merchandising ability to handle and sell certain goods and
services.

33
5. Vertical Marketing System
A Vertical Marketing System consists of all levels of independently owned
businesses along a channel of distribution. Goods and services are normally distributed
through one of these types of vertical marketing systems: independent, partially
integrated, and fully integrated.
In an independent firm vertical marketing system, there are levels of independently
owned firms: manufacturers, wholesalers and retailers. Such a system is most often used
when the manufacturers have to reach a wider market or retailers are small. Also when
company resources are low and channel members want to share costs and risks such an
arrangement is desirable. Independent retailers capitalize on their targeted customer base
and build loyalty by playing the role of a friendly shop-owner and build a good word of
mouth communication. With a partially integrated vertical marketing system, two
independently owned businesses along a channel perform all production and distribution
functions without the aid of the third.

6. Convenience Stores

A convenience store is a well-located store. The ease of shopping and

personalized services are the major reasons for its patronage, even when it charges
average to above average prices, and carries a moderate number of items.. They are large
in size and carry 9,000 to 11,000 Items. They are chosen due to volume sales, self-
service, low prices and easy parking. The self-service nature allows supermarkets to cut
costs, as well as increase volume. The conventional supermarket was once the most
common format.8 Conventional supermarkets have to deal with intense competition from
other types of food stores. Convenience stores offer greater customer convenience; food
based superstores and combination stores have more product lines and greater variety, as
well as better gross margins; and box and warehouse stores have lower operating costs
and prices. Membership clubs, with their discount prices, also provide competition
especially now that they have expanded food lines. Discount store chains are able to
undercut supermarket prices because their efficient distribution systems focus on
reducing inventory investments by selling fast moving items.
7. Food-based Superstores:

34
 Superstores are large supermarkets ranging from 20,000 to 50,000 square feet.
They cater to consumers grocery needs and offer them the ability to buy fill-in general
merchandise. The advantages of food-based superstores are that they are efficient, offer a
degree of one-stop shopping, stimulate impulse purchases and feature high profit general
merchandise. Other advantages are that it is easier and less costly to redesign and convert
supermarkets into food-based superstores than combination stores. Management expertise
is better focused in food-based superstores. Many consumers feel more comfortable
shopping in true food stores than combination stores. Most of the supermarket chains
have also started offering food to compete with these stores.

8. Combination Stores/ Supercentres

Combination stores are food-based retailers that unite supermarket and general
merchandise sales in one facility with the latter typically accounting for 25 to 40 percent
of total sales. They achieve operational efficiencies and cost savings through their large-
scale operations. Consumers like one-stop shopping and travel further to visit these
stores. Impulse sales are high. A super centre is a combination store blending an economy
supermarket with a discount department store. Traditional supermarkets are facing
serious new competitive challenges from supercentres at the price-conscious end of the
market and from "home meal replacement" providers at the convenience-oriented end.
Supercentres with an average size of about 150,000 sq.ft. Devote about 40% of their
space to grocery items and the rest to discount general merchandise.

9. Warehouse Store:
A warehouse club is a retailer that offers a limited assortment of food and
general merchandise, with limited services, at low prices to ultimate consumers and small
businesses. It appeals to priceconscious consumers, who must be members to shop
there. Its inventory turnover rate is several times that of a department store. Stores are
large and located in lowrent areas. They have simple interiors and concrete floors. Aisles
are wide to facilitate pick up pallets of merchandise. Specific brands and items differ

35
from time to time as the stores buy merchandise available on special promotions from
manufacturers. The clubs pass on these savings to shoppers through lower prices. Most
warehouse clubs have two types of members. Wholesale members who are small business
people and individual members who purchase for their own use.

10. Department Store

A department store is a large retail unit with an extensive assortment (width and
depth) of goods and services that are organized into separate departments for purposes of
buying, promotion, customer service and control. It has the greatest selection of any
general merchandise retailer and often serves as the anchor store in a shopping centre or
district. Department Stores are unique in terms of the shopping experience they offer, the
services they provide and the atmosphere of the store. They offer a full range of services
from altering clothing to home delivery. Over its history, the department store has been
responsible for many innovations, including advertising prices, enacting a one-price
policy (whereby all shoppers pay the same price for the same good or service.),
developing computerized checkouts, offering money back guarantees, adding branch
stores and decentralized management However, during the past few years, industry wide
sales growth of traditional department stores has lagged behind the full line discount
stores.

11. Full line Discount Store

A fullline discount store targets the middle -class and lower- middle class
shoppers who looking for good value. It conveys the image of a high-volume, low cost
and fast turnover outlet. It sells a broad merchandise assortment for less than
conventional prices. It is likely to carry the range of product lines expected at department
stores. Products are normally sold via self-service with minimal assistance in any single
department. Centralized checkout service is provided. Buildings, equipment and fixtures
are less expensive; and operating costs are lower than for traditional department stores.
To respond to category specialists, full line discount retailers are creating more attractive
shopping environments, placing more emphasis on apparel, developing private label

36
merchandise, and increasing store visits by offering easily accessible convenience store
merchandise.
12. Specialty Stores
A traditional specialty store concentrates on a limited number of complementary
merchandise categories and provides a high level of service. They are smaller in size.

13. Drugstores
Drugstores are specialty stores that concentrate on health and personal grooming
merchandise. Pharmaceuticals often represent over 50 percent of drugstore sales and an
even greater percentage of their profits. Drugstores are facing considerable competition
from discount stores and supermarkets adding pharmacies. In response, the major
drugstore chains are building larger stand-alone stores offering a wider assortment of
merchandise, more frequently purchased consumer products and drive through windows
for picking up prescriptions.

14. Category Killers

The category killer concept originated in the U.S. due to abundance of cheap
land and the dominant car culture. A category specialist is a discount store that offers a
narrow variety but deep assortment of merchandise. These retailers are basically discount
specialty stores. By offering a complete assortment in a category at low prices, category
specialists can kill a category of merchandise for other retailers. Most category
specialists use a self-service approach. They use their buying power to negotiate low
prices, excellent terms and assured supply when items are scarce.

15. Factory Outlet Stores

Outlet Stores are off-price retailers owned by manufacturers or by department

or specialty store chains and are frequently referred to as factory outlets. A factory outlet
is a manufacturerowned store selling manufacturer closeouts, discontinued merchandise,
irregulars, cancelled orders, and sometimes, in season, first quality merchandise. They
closely resemble shopping centers, both in terms of size, layout, and in carefully

37
controlled tenant mix, with manufacturers operating separate units on a single co-
coordinated site. Additional amenities include car parking, restaurant and leisure
facilities. Factory outlet stores are located out of town, lowering development and
operating costs and the distribution channel for certain categories of merchandise is
shortened, cutting out the functions and profits of traditional retailers

16. Hypermarkets
Hypermarkets were created in France after World War II. A hypermarket is a
very large retail store offering low prices. It combines a discount store and superstore
food retailer in one warehouse like building. Hypermarkets can be up to 300,000 square
feet and stock over 50,000 different items. Hypermarkets are unique in terms of store
size; low operating margins, low prices and the size of general merchandise assortment.
The store sells a broad variety of basic merchandise ranging from food to consumer
electronics. All hypermarkets are based on three concepts of: one stop shopping, ample
free parking and a discount pricing strategy. The main limitation of hypermarkets is that
many consumers find that shopping in stores over 200,000 square feet is too time
consuming. It is hard to find merchandise and checkout lines can be very long.

17. Variety Store

A variety store handles a wide assortment of inexpensive and popularly priced

goods and services, such as stationary, gift items, womens accessories, health and beauty
aids, light hardware, toys, house ware and confectionery items. They do not carry full
product lines, may not be departmentalized and do not deliver products. Transactions are
often on a cash basis. There are often displays and few salespeople.

18. Vending Machines

Vending machine is a retailing format involving the coin or card operated
dispensing of goods (such as beverages) and services (such as life insurance sales at
airports). It eliminates the use of sales personnel and allows for round the clock sales.
Machines can be placed wherever they are most convenient to the consumers inside or

38
outside a store, in a hotel corridor, at a station, airport or a street corner. Although many
attempts have been made to vend other products, beverages and food items remain the
largest category. Hotels, restaurants and at train stations are highly visible spots for
vending but they account for a small proportion of sales.
19. Electronic Retailing
Electronic retailing (also called e-tailing and Internet retailing) is a retail format
in which the retailer and customer communicate which each other through an interactive
electronic network. After an electronic dialogue between the retailer and customer, the
customer can order merchandise directly through the interactive network or by telephone.
The merchandise is then delivered to the customers address. The World Wide Web can
serve one or more of these roles for a retailer:

Project a retail presence.

Generate sales as the major source of revenue for an online retailer or as a
Complementary source of revenue for a store-based retailer.
Enhance the retailers image.
Reach geographically dispersed consumers including foreign ones.
Provide information to consumers about the products carried, store locations
usage
Information, answers to common questions, customer loyalty programmes and so
on.
Promote new products and fully explain and demonstrate their features.
Furnish customer service in the form of E-mail, hot links, and other
communications.
Be more personal with consumers by letting them point and click on topics they
choose.
Conduct a retail business in a cost efficient manner.
Obtain customer feedback.

39
 Chapter 4
Analysis & Interpretation

1. Table showing Percentage of Age group

Table No. 1

Age
group No. of Respondents Percentage

Below 30 41 41

31 - 40 32 32

41 - 50 16 16

Above 50 11 11

Total 100 100

5%
15%
33%

20%

27%

20-Oct 20 - 30 30 -40 40 - 50 More than 50

40
Interpretation

The above chart shows that 41% of the respondents are below 30 years, 32% of the
respondents are between 31 40 years, 16% of the respondents are between 41 50
years, 11% of the respondents are above 50 years. This gives us a feeling that it is
youngsters that prefer on line buying and the use of internet.

2. Table Showing Respondents Mode to Accessibility of

Net
Table No. 2

MODE NO. OF PERCENTAGE

RESPONDENTS
House 23 23
Office 31 31

Cyber 46 46
Caf
Total 100 100

50 46 46
45
40
35 31 31
30
23 23 NO. OF RESPONDENTS
25
PERCENTAGE
20
15
10
5
0
House Office Cyber Caf

41
Interpretation

From the above graph it is assumed that 23% of respondents browse in their own house,
31% of respondents browse in their office, 46% of respondents browse in cyber caf,
which gives us a feeling that most of the respondents do not have browsing facility in
their house. This makes them depend on cyber caf which is expensive.

3. Table showing the Number of respondents who have purchased on

line
Table No. 3

Have purchased on- No. of respondents Percentage

line

Yes 41 41

NO 59 59

Total 100 100

3. Graph showing the Percentage of people who have purchased on line

200
180
160 100
140
120 Percentage
100 59 No. of respondents
80 Have purchased on-
41 line
60 100

40 59
41
20
0 0 0
0
1 2 3 4

42
Interpretation

The above graph shows that 41% of Respondents have purchased on line and 59% of
respondents have not purchased. This draws light to the fact that there is still a lot to do to
make people buy on line.

4. Table showing the reason why people are reluctant to buy on line

Table No. 4

No. of
Reason respondents Percentage
Un aware of
the mode of
payment 4 6.78
Absence of
salesmanship 20 33.89
Absence of
personal touch 12 20.33
Fear of doing it
for the 1st time 23 38.98

total 59 100

3%
17%
UN aware of the mode of payment
Absence of salesmanship
Absence of personal touch
51% 10% Fear of doing it for the 1st time
Total
19%

43
Interpretation

The above chart 4 respondents are unaware of the mode of payment, 20 respondents feel
there is absence of salesmanship in on line buying, and 12 respondents feel that there is
absence of personal touch. This gives us a feeling that respondents vary in their
opinion about on line buying. Most of them are reluctant to take a decision for the first
time to buy.

5. Table showing how respondents found on line buying

Table No. 5

Attribute No. of respondents Percentage

Convenient 12 29.26
time saving 3 7.31
Variety 5 12.2

Availability 17 41.46
Cost saving 4 9.76
Total 41 100

44
Interpretation

From the above chart it is found that 12 respondents feel that it is convenient to buy on
line, 3 respondents feel that it is time saving, 5 respondents feel that it is a variety to buy
on line, 17 respondents feel products will be available when ordering on line and 4
respondents feel it is cost saving. Where in most of the respondents are of the opinion that
on line buying is advantageous due to the availability of the product.

6. Table showing the number of hours that respondents had to wait to

get the product they had ordered on line

Table No. 6

Time( In hours) No. of respondents Percentage

10 - 30 2 4.9
20 - 30 6 14.63
30 -40 8 19.51

40 - 50 11 26.83
More than 50 14 34.15
Total 41 100

5%
15%
33%
10 - 20
20 - 30
30 -40
40 - 50
20% More than 50

27%

45
Interpretation

From the above chart it is seen that 5% of respondents waited for 10 20 hours for the
delivery of the goods they had ordered on line, 15% of respondents waited for 20 -30
hours, 20% of the respondents waited for 30 -40 hours, 27% of the respondents waited
for 40 50 hours, 35% of respondents waited for more than 50 hours. This gives us a
feeling that different products and different sellers give the products ordered on line at
different time lag.

Influencer No. of respondents percentage

Father & Mother 06 14.63

Father 09 21.95

Mother 03 07.31

Children 17 41.46

All 06 14.63

Total 41 100

7. Table showing the influencer of purchase at home

Table No. 7

46
 45 41.46
40
35
30
25 21.95
20 Percentage
14.63 14.63
15
10 7.31

5
0
Father & Father Mother Children All
Mother

Interpretation

The above graph shows that 15% of respondents feel that it is the Father and mother who
influence the buying behavior. For 22% of respondents it is the Father who influences
the buying behavior. For 7% of respondents it is the Mother who influences the buying
behavior. For 41% of respondents it is the children who influence the buying behavior
For15% of respondents it is the all together that influence the buying behavior.

8. Table showing the web sites that respondents usually visit in relation
to on line shopping
Table No. 8

Sites No. Of Respondents Percentage

Rediff.com 9 21.95

Yahoo.com 6 14.63

Hotmail.com 4 09.75

Fabmart.com 10 24.39

Homedel.com 7 17.07

47
 Ecomart.com 5 12.19

Total 41 100

12%
22%
Rediff.com
17%
Yahoo.com
Hotmail.com
Fabmart.com
Homedel.com
15%
Ecomart.com

24% 10%

Interpretation

From the above chart it is assumed that 22% of the respondents visit rediff.com in
relation to shopping, 15% of the respondents visit yahoo.com in relation to shopping, 9%
of the respondents visit hotmail.com in relation to shopping, 24% of the respondents visit
fabmart.com in relation to shopping, 17% of the respondents visit homedel.com in
relation to shopping, 12% of the respondents visit ecomart.com in relation to shopping

9. Table showing the interest of Respondents to shop on line in future

Table No. 9

Attribute No. of Respondents Percentage

Yes 30 73.17

No 11 26.82

Total 41 100

48
 100
26.82
90
80
70
60 No
50 Yes
73.17
40 11
30
30
20
10
0
No. of Respondents Percentage

Interpretation

The above graph shows that 73% of respondents are interested to shop again through the
Net and 27% of respondents are not interested shop again through the Net.

10. The Table showing the overall rating of online shopping by the
respondents
Table No. 10

Ratings No. of respondents Percentage

Highly satisfactory 17 41.46

Satisfactory 14 34.14

Dissatisfactory 10 24.39

Total 41 100

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 45 41.46
40
34.14
35

30
24.39
25 No. of respondents
20 17 Percentage
14
15
10
10

0
Highly satisfactory Satisfactory Dissatisfactory

Interpretation

From the above graph it is found that 41% of respondents are highly satisfied about on
line buying 34% of respondents are satisfied about on line buying 25% of respondents
are dissatisfied about on line buying This gives a feeling that more number of
respondents are highly satisfied or at least satisfied about on line buying. This increases
the scope for online selling.

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 Chapter no. 5
Summary of findings,
Suggestions and Conclusion

Findings
Some of the findings from the study that might stimulate the degree of change
from the conventional strategy are given below.

1. The volumes in the Indian market lie in the middle and lower middle class. The growth
and impact of e-retailing in India would be directly proportionate to the penetration of the
internet in these categories. Currently access costs are very high. These access costs are a
function for two variables:
The cost of acquisition of computers would be a pre-requisite for internet
penetration. It is typically observed that the probability of customers making a purchase

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on the net from a cyber caf is very low. Cyber cafes are mainly used for checking mail
and other planned search activities. Thus it is necessary for customers to possess a
computer with an internet connection o improve the scope of e- business.
The cost of connectivity that basically refers to the expenses, incurred in the
telephone bill and internet subscription costs In order for the Internet levels of the internet
to improve, these costs have to reduce thus encouraging more customers to become net
savvy.

2. Average literacy rates are also an important factor though a large percentage of the
population watches TV and is able to appreciate the nuances and meaning of the
commercials that are aired, Literacy would be an important factor in increasing internet
penetration besides actually increasing the accessibility of the bet as a medium of
business.

3. The cultural factors and Indian traditions are a key impediment to the development of e
retailing shopping in India is not just a chore, it is an enjoyable experience. In the west
most of the families shop on the week end to shore up glossaries and provisions for the
coming week it is viewed as a task that has to be completed. In such a scenario, the
Internet with its apparent benefits of greater speed, convenience and information
provided those with an attractive option the situation in India however is completely
different. For the traditional Indian house wife purchase of vegetable/ Glossaries by
bargaining with the shop keeper is an important event in the day. Add to this the fact that
a large percentage of consumer purchases in India occurs in an around festivals. This
implies a lot of color fund and gaiety that would be missing in the case of on line
shopping.

4. All the above points have focused on the B2C model of e- business. In the B2B model
in India, the key driving factor is relationship. It would take a significant amount of time
to build the required level of trust in an online relationship. Thus, a large part of the B2B
volumes would be driven by establishing connectivity among existing business partners.

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5. Only 23% of the respondents are accessing the net in their house it means that in India
Internet in house is not yet become common. But in course of time it will definitely
increase

Recommendations

The recommendations to improve the present situation of e-retailing are:

1. Buyers in fast-moving product categories should use electronic market place to save
money o the goods they buy, while sellers should seize the opportunity to reach new
customers and delay the development of a buyer controlled market place.

2. Third parties should act promptly to attract a critical mass of buyers and
sellers to their own market place.

3. Logistics systems ensure that the company delivers the product to the
customer in the shortest possible time.

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4. IT infrastructure costs can be lowers through implementation of internet
based computing.

5. The following parameters may be taken care of, for the success of e-
retailing.

Loyalty
Customer acquisition
retentions
per-transaction value

6. The sites must be made more users friendly.

7. There must be an e-relationship software that synchronize all of the customer contact
channels and prioritize means of conduct namely phone, Fax, Pager, or e-mail according
to individual customer preferences. The objective is to support people in the way they
want to do business and to be able to speak to customers through the devises most
appropriate to them.

Conclusion

Theres little doubt that E- retailing is the future. But, thats just the point: it is
the future. The present clearly belongs to B2B. Realizing that future will require research,
introspection, learning and educated effort. Lets then conclude by compiling a recipe for
success for E- retailers the world over:

Get your back-end systems into shape. Customers keep coming back only if
Earlier shopping experiences have been pleasant and successful. Quit gloating
over the 75% success rate of on-line purchases.Remember, you are competing

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 with the neighborhood store, which, more often than not, has a close-to- 100%
record, and a smiling, friendly shop-keeper thrown in for good measure.

Integrate! Integrate! Integrate! Treat your E- retailing site as the customer-

Facing end of a supply chain, not as a stand-alone antenna for attracting Web-
travelers. Focus on building strong bonds between every link in the supply chain
(order processing, order status tracking, payment status, inventory level reporting,
and procurement) and build your B2C store-front.

Build alliances. Many traditional brick-and-mortar firms have well-

established
Supply chains but lack the easiness that you can bring in. You, in all probability,
have neither the inclination nor the resources to build a successful supply chain.
Its a win-win situation!

Get help. Youve heard this before, but its worth repeating: e-retailing isnt
just
About building a pretty website. An established management consulting firm will
bring in the requisite skills to evaluate your business plan, check out revenue
models, help identify potential alliances and integrate supply chain processes with
your eCommerce initiatives.

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 BIBLIOGRAPHY

BOOKS REFERED
A managers guide to e commerce by kolakota
Retailing management by Swapna Pradhan

WEBSITES
http://www.amzon.com
http://www.mindtree.com
http://www.fabmart.com
http://www.yahoo.com
http://www.homedel.com

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 Annexure

Questionnaire

Dear Sir/ Madam,

I am a student of Rohidas patil institute of management College, pursuing my final year

MBA. As part of my studies I have to submit a dissertation to the Mumbai University. I
would be grateful if you could answer the following questions honestly. Your valuable
time spared will assist me in collecting relevant data in my area of research. All
information collected will be treated as confidential. Information gathered is strictly for
research purpose.

Age below 30 yrs 31-40 yrs 41-50 yrs above 51 yrs

Family Income per annum (approximately)

Rs. 50000 - 100000 Rs.100000 - 150000

Rs. 150000 - 200000 Rs. 200000 & Above

Marital Status Single Married

1. Do you access the net? Yes No

2. Where do you access the net? House office Cyber caf

3. Have you ever purchased through on- line? Yes No

4. If No why?

UN aware of the mode of payment Absence of personal touch

Absence of salesman ship Fear of doing it for the first time

5. If yes, how did you find it?

Convenient Variety Availability

Time saving Cost saving

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6. How long do you have to wait for the delivery of goods ordered?

10 20 hrs 20 30 hrs 30 40 hrs

40 50 hrs More than 50 hrs

7. Details of the purchasing process from the point of order till delivery.

8. Who influences the purchase of goods at home?

Father & mother Father Mother

Children All

9. Which web site do you visit to do shopping?

rediff.com yahoo.com hotmail.com

Fabmart.com homedel.com ecomart.com

10. Are you interested in shopping again through the net?

Yes No

11. If yes or no why?

12. Your over all rating of on line shopping

Highly satisfactory Satisfactory Dissatisfactory

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