“CONSUMER BEHAVIOR on online shoping

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RESEARCH PROJECT

REPORT

ON

“CONSUMER BEHAVIOR

IN ONLINE SHOPPING ”

“A report submitted to

Gautam Buddh Technical University

for the

Partial fulfillment of MBA Degree 2009-11”

Submitted BY: Saurabh Gupta MBA - IVTh SEM 0922270043

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A RESEARCH REPORT

ON

“

Consumer Behavior In Online

Shopping

”

Submitted in partial fulfillment of the requirement for the award of

degree of

MASTER’S OF BUSINESS ADMINISTRATION

Session (2009-11)

UNDER THE GUIDENCE OF MISS. MEENAKSHI SRIVASTAV

(FACULTY)

Submitted by

SAURABH GUPTA

MBA (Marketing) Roll No- 0922270043

ITS ENGINEERING COLLEGE (222)

Greater Noida

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CERTIFICATE

This is to certify that the Research Project Report entitled “Consumer Behavior In

Online Shopping” being submitted by ________________ for fulfillment of the

requirement of Gautam Buddh Technical University, Lucknow is a record of an independent work done by his under my guidance and supervision.

Dr..A.S.Pandey Ms.Meenakshi Srivastav

HOD-MBA Concerned Faculty Guide

ITS Engineering College ITS EngINEERING College, Greater Noida.

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DECLARATION

I Saurabh gupta to declare that the Research project report entitled

“Consumer Behavior In Online Shopping” being submitted to

the GAUTAM BUDTH TECHNICAL UNIVERSITY for the

partial fulfillment of the requirement for the degree of Master of

Business Administration is my own endeavors and it has not been

submitted earlier to any institution/university for any degree.

Place:

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INTRODU

CTION TO

SUBJECT

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1.1 Executive summary

The growing use of Internet in India provides a developing prospect for online shopping. If E-marketers know the Factors affecting online Indian behavior, and the relationships between these factors and the type of online buyers, then they can further develop their marketing strategies to convert potential customers into active ones, while

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retaining existing online customers.

This project is a part of study, and focuses on factors which online Indian buyers keep in mind while shopping online. This research found that information, perceived usefulness, ease of use; perceived enjoyment and security/privacy are the five dominant factor s which influence consumer perceptions of Online purchasing.

Consumer behavior is said to be an applied discipline as some decisions are significantly affected by their behavior or expected actions. The two perspectives that seek application of its knowledge are micro and societal perspectives.

The online purchasing behavior of online shoppers and factor influencing online shopping behavior and its future perspective. Internet is changing the way consumers shop and buy goods and services, and has rapidly evolved into a global phenomenon. Many companies have started using the Internet with the aim of cutting marketing costs, thereby reducing the price of their products and services in order to 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

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most of the revenue of online transactions comes from 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 in sight 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 factors or assumptions which are based on the traditional models of consumer behavior, and then examine their validity in the Internet context

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1.2 Introduction

Internet is changing the way consumers shop and buy goods and services, and has rapidly evolved into a global phenomenon.

Many companies have started using the Internet with the aim of cutting marketing costs, thereby reducing the price of their products and services in order to stay ahead in highly competitive markets. Companies also use the Internet to convey communicates 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 the will receive if they purchase the product from a particular store. Many experts are optimistic about the prospect of online business. In addition to

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the tremendous potential of the E-commerce market, the Internet provides a unique opportunity for companies to more efficiently reach existing and potential customers. Although most of the revenue of online transactions comes from business-to-business commerce, the practitioners of business-to-consumer commerce should not lose confidence . It has been more than a decade since business-to-consumer E-commerce first evolved. Scholars and practitioners of electronic commerce constantly strive to gain an improved insight into consumer behavior in cyberspace. Along with the development of E-retailing, researchers continue to explain E-consumers behavior from different perspectives. Many of their studies have posited new emergent factors or assumptions which are based on the traditional models of consumer behavior, and then examine their validity in the Internet context

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Factors affecting students’ attitude toward

online shopping

Today Internet is not only a networking media, but also as a means of transaction for consumers at global market. Internet usage has grown rapidly over the past years and it has become common means for delivering and trading information, services and goods (Albarq, 2006). According to ACNielsen, more than 627 million people in the world have shopped online (ACNielsen, 2007). Forrester (2006) research estimates e-commerce market will reach $228 billion in 2007, $258 billion in 2008 and $288 billion in 2009. By 2010 e-commerce will have accounted for $316 billion in sales, or 13% of overall retail sales. A study by International Data Corporation (IDC) Asia Pacific indicates that the future forecast for online shopping in Malaysia looks bright and promising (Louis andLeon, 1999). Malaysia moved towards advanced information, communications based on the growing trend of Internet users in the last three years and multimedia services.

Moreover, due to a rapid rise in the number of PCs in Malaysia, as well as growth in the proportion of PCs hooked up to the Internet each year, provides greater opportunities for Malaysians to conduct both business and shop online (Legard, 1998). A mid-2005 survey by the Malaysian Communication and Multimedia Corporation (MCMC), only 9.3% of Internet users had purchased products or services through the Internet during the preceding three months. Taylor Nelson Sofres (2001) found that the penetration of Malaysians shopping online, that is, people who bought or ordered goods and services online in 2000 was 1% of the total younger population in Malaysia. Malaysia internet shoppers are relatively young, highly educated, having higher social status, and command a more favorable financial position.Mohd Suki et al. (2006) conducted a study

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among Malaysian students and found that they enjoyed purchasing books/journals/magazines through the internet. ACNielsenalso reported that, across the globe, the most popular items purchased on the internet are

books 34%, followed by videos/DVDs/games 22%, airline

tickets/reservations 21% and clothing/accessories/shoes 20% (ACNielsen, 2005).

Considering that Internet shopping, is still at the early stage of development, little is known about consumers’attitudes towards adopting this new shopping channel and factors that influence their attitude toward (Haqueetal., 2006). The consumers’ attitude towards online shopping is known as the main factor that affects e-shoppingpotential (Michieal, 1998). Attitudinal issues are also thought to play a significant role in e-commerce adoption. That means that, through motivation and perception, attitudes are formed and consumers make decisions. Thus, attitudes directly influence decision making (Haqueet al.,2006).

Attitudes serve as the bridge between consumers’ background characteristics and the consumption that satisfies their needs (Armstrong and Kotler, 2000; Shwu-Ing, 2003). Because attitudes are difficult to change, to understand consumers’ attitudes toward online shopping, can help marketing managers predict the online shopping intention and evaluate the future growth of online commerce.

The proliferation of online shopping has stimulated widespread research aimed at attracting and retaining consumers from either a consumer or a technology-oriented view. The two views do not contradict but rather reinforce each other. Because the success of an electronic market largely depends on consumers’ willingness to accept it. Due to this, we adopted the consumer-oriented view of online shopping in this study.

The consumer-oriented view focuses on consumers’ attitude about online shopping. For example, online consumer behavior has been examined from the perspectives of perceptions of benefits toward online shopping (Bhatnagar and Ghose, 2004a, b; Garbarino and Strabilevitz,2004; Huang

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et al., 2004; Liao and Cheung, 2001; Pavlou, 2003). The potential benefits of online shopping for consumers include convenience, various selection, low price, original services, personal attention and easy access to information, among others.

Moreover, shopping orientation (Korgaonkar and Wolin, 1999; Li et al., 1999; Safavi, 2007; Swaminathan et al., 1999). Therefore, it is thus important to recognize that numerous factors precede attitude formation and change. In addition, understanding consumer attitude toward onlineshopping helps marketing managers to predict the online shopping rate and evaluate the future growth of online commerce (Shwu-Ing, 2003). The rest of the paper is organized as follows: first examines the relationship between consumer factors and attitude toward online shopping and second, analyzes consumer factors that influence attitude toward online shopping.

1.3 Theoretical Foundation

The Internet has dev eloped an into a new distribution channel and online transaction are rapidly increasing. This has created a need to under how the consumers perceive online purchasing .

Price, Trust and Convenience were identified as important factors. Price was considered as to be a most important factor for a majority of the students. The internet has created a paradigm shift of the traditional way people shop. A consumer is no longer bound to opening a times or specific location. So he can become active at virtually any time any place and purchase the products or services.

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The internet is relatively a new medium for communication and the information exchange that has present in everyday life. The number of internet user is constantly increasing which is also signifies that online purchasing is increasing. The rapid increasing is explained by the consumer behavior. The internet is considered a mass medium that provides the consumers with purchase characteristics as no other medium. Certain characteristics are making it more convenient for the consumer compared to the traditional way of shopping, such as the ability to any time view and purchase products visualize the needs with products and discuss products with other consumers. Online shopping is the process of consumer go through the when they decide the shop on the internet.

The internet has developed into a new distribution channel and the evaluation of this channel. E-commerce has now identified . Using the internet to shop online has become one of the primary reasons to use the internet combined with searching for products and finding the information about them. Therefore internet develop the 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.

Due to the rapid development of the technologies surrounding the Internet, a company that is interested in selling products from its web site will constantly has to search for an edge in the fierce competition. Since there are so many potential consumers, it is of the out most importance to be able to understand what the consumer wants and needs.

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1.3.1Online Shopping In India

It is a fact that a great online shopping revolution is expected in India in the coming years. There is a hug e-purchasing power of a youth population aged 18 -4 0 in the urban area.

Rise of Online Shopping In India

E-commerce is seeing a steep rise according to Assocham (Associated Chambers of Commerce & Industry of India). Two metros (Delhi and Mumbai) are driving this growth with each contributing 24% and 20% of the E-sales log on share

respectively! A major reason why metros are contributing to e-shopping growth is the literacy rates and the cities’ internet savvy population. In cities like Delhi safety could also be a major cause! It’s very surprising that Bangalore being the IT Hub of the country contributes a very meager 6%. They have also predicted that

e-commerce will cross 9000 cores by March 2008.

There are many online shopping portals like http://www.futurebazaar.com and http://www.indiaplaza.in where consumer durables are sold but they have no option to shop for groceries online!

Catering to this very need is a new startup online portal on the rise

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Ltd, a firm based in Bangalore and claims to be the first Online Shopping Portal in India that allows customers to shop for groceries online. Speaking of groceries, it has got over 3000 products in this segment alone! That’s like WOW! Interestingly, it also offers 24 hrs delivery for all products, bettering the delivery services

provided by other Online shopping portals. It provides customers with the option of swiping their credit/debit cards at the time of delivery! Storrz representatives carry a mobile enabled point of sale device to the customer's door step to make this happen. This seems to be a brilliant option as customers can now get to know what groceries they are actually buying before finalizing the bill!

Besides this, one can also select SodexHo Meal Passes as their payment option allowing a large number of coupon holders to now use their coupons Online! This delivery covers the whole of the country using Blue Dart's Domestic Priority Service for 24hrs delivery. At present certain categories like perishables are

limited to Bangalore only. It has tied up with Major Retailers and OEM Brands like Namdharis Fresh, MTR, Dr Morepen, Jus’Trufs, Mars, Pedigree, Tilia, The Art of Living, Indus Tree Crafts etc.

Storrz.Com MD and CEO Chandan Maruthi Says "We are happy to have 40% of business come from repeat customers. We make sure that every shopping is a memorable experience for the customer and no stone it left unturned to make sure that customers are satisfied. We have also made multiple payment options available for

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Features of Storrz.Com Shopping Mall for Manufacturers

and Retailers

:

• Fully equipped Online shopping store that can be setup and launched

quickly

• Online Store is placed along with other premium brands in the shopping

mall

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• Drive both direct and indirect traffic with the Shopping Mall

environment

• Built on cutting edge technologies like AJAX, XML and more, the

system has taken

over 5 person years to develop

• Fully integrated with Leading Payment Gateway solutions, SMS

Gateways, Email

Gateways etc Overall, it's a pretty good concept with a lot of promise!

Online Shopping in India – Why More Shoppers Are Not

Ordering Online

Online shopping is quite common these days in the developed world than it was about 5 years ago but it is not the same in India for its own set of reasons. In

developed economies consumers find the worldwide web a great place for bargain-hunting, with most goods available at lower prices than in a bricks-and-mortar store. But convenience appears to be an even bigger attraction as revealed in surveys because most online shoppers find the crowded high street too stressful.

Though online shopping has witnessed growth in India but it is still not pervasive like the west and the growth is also limited to certain areas like online travel booking and perhaps stock trading (which actually is not pure e-commerce). The main reason why shoppers in India are not willing to shop online is that they don’t get any real value or incentive. Also they are wary about fraud, delivery and

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The first issue that online consumers are facing in India is the narrow range and limited choice of merchandize. Even the leading sites like ebay.in, indiaplaza.in, indiatimes or rediff have very limited range of items and therefore are hardly attractive. I personally searched many a times for books and music titles among other things in the Indian sites but seldom found any great product and never exciting prices.

In spite of limited range still some consumers want to buy online just for the sake of convenience but then their experience is also not good. There are too many cases of delayed delivery, damaged or inferior goods, quality issues and even instances of cheating where the goods were never shipped.

Once I bought 3 items from Sify shopping to gift a friend of mine and to my horror I came to know that out of 3 items only one was okay, another was damaged and the third once never sent at all. Needless to say there was no help from sify customer care and my complaint only fell to deaf ears and I was actually cheated. My experience with ebay.in was also bad; I ordered an electric hot plate which took more than double time than it was promised and finally one of he hob went off just after 2 days.

But the worst part of Indian online shopping is most of the goods are actually priced more than the street price which is just so ridiculous. Some sites like rediff and indiatimes do sell some cheap items but then they are mostly unbranded or low quality Chinese goods and basically waste of money. Here in India, you cannot expect any thing from your online merchants; no killer deals or exciting prices, no delivery guarantee, no after sales support or replacement warranty.

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shoppers buyers in India would prefer to shop from brick-and-mortar stores where at least they can inspect the product and bring them back for

replacement or refund if found faulty. And this trend is quite natural as why one would buy some inferior goods at higher price where there is no

commitment of delivery or after sales service. There are some people who are buying on net but in most cases they are one-time customers who will think twice to visit again after burning their fingers.

This is not an imaginary account and anybody can easily check out the facts about the customer satisfaction level of online shoppers in India. Just visit any product review website and start searching for keywords like “ebay”. You will find lots of complaints and damning reviews which actually speak about the harassment and misfortune that these poor consumers had to face as they chose to buy online.

However, there is a demand for e-commerce in this country as people have less and less time to shop. I need not go to a store to buy books, music or gift items and if I can get a better price and some guarantee of after sales I will even buy capital goods like fridge or laptop computers from net.

Today consumers are looking for real good deals and they are not fools that you can hoodwink them. I am sure there are more people in India who buy books and music from amazon than those who shop regularly at rediff or indiantime and they do it because they can trust Amazon and get value there even if they have to pay hefty handling charges for the distance.

I purchase books regularly from amamzon because I know I will find any damn book in that site and I need not look around. Their customer service is also impeccable and on most occasions they have shipped before the

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expected delivery date. Precisely, this is the kind of value what the Indian shopping sites need to deliver to Indian customers because as the shopper will find value they will have no problems to shop online.

Jaydeep Bhattacharjee writes on consumer issues concerning the Indian consumers. He is the founder of http://www.admanya.com – India’s leading C2C portal. Admanya is free and it completely depends on consumer participation for its content. Join Admanya and be an empowered consumer – you can read or write a review about almost any product or service.

1.3.2Rising Connectivity

If we observe the growth of Internet Subscribers 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 provider s. Wi-Fi & Wimax system has also started 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 Indian s are going to online shopping and the frequency of India’s online buying is crossing the overall global averages.

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1.3.3 Few Factors That Boost Online Shopping in

India

 Rapid growth of cybercafés across India

 Access to Information

 The increase in number of computer users

 Reach to net services through broadband

 Middle-class population with spending power is growing.

There are about 200 million of middle-class population good spending powers. These people have very little time to spend for shopping. Many of them have started to depend on internet to satisfy their shopping desires

1.3.4 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 -3 5 year range.

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Indian online matrimonial sector is worth around $230 million Worldwide E-commerce is only growing at the

rate o f 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 $11 million in 1999 -2000 to $ 522 million in 2007 and it is

expected to rise above $70 0 million by end March 2010.

1.3.5 Changing Attitude towards Online Shopping:

“Awareness, Future Demand Focus for Emerging Markets & Current Issues” Malls springing up everywhere and yet people are E-shopping . And not in small numbers either. Consumers are more rational nowadays and have ability to get the choices from the market. Awareness among the consumers is spread through internet. The number of internet users is increasing day by day which attracts people who have an option to buy online. 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? In India there are some segments of people who have not yet tried purchasing over internet.

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1.3.6 The Increase of Internet Shopping

Internet shopping is shaping up. However today, internet shopping

is a really significant part of the retail sector. Internet shopping is

the new shopping experience of the future. Of course the other

major hurdle for internet shopping is shipping charges,

sometimesthey are to expensive. The growth rate for Internet

shopping is growing. Secure internet shopping is secure using

encryption and ssl techniques. Internet shopping is easier, safer,

and more convenient than at any point in its history. Internet

shopping is fast becoming one of the easiest ways to buy almost

anything you want. Internet shopping is a way of shopping that

allows shopping for required products without going to the store

physically. The Internet is great because people are able to shop

24 hours a day without having to leave their home or work.

The Internet is changing the wholesale/retail landscape daily. In

today's market the shopping sector is taking about a tenth of all

retail shopping sales in the US, and the percentage in other

countries is not as high. One reason we use the internet is to buy

merchandise at a discount to retail.

One of the biggest benefits of shopping online is the convenience

and access to more products and information 24 hours a day 7

days a week. Note that blocking all cookies prevents some online

services from working, so you must allow cookies on your

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browser.

Nearly 40 percent of remote workers said they use their work

computers for Internet shopping. Be a smart shopper and use

common sense when online shopping and just go ahead and enjoy

your Internet shopping experience today. The more people that

shop online, the bigger their expectations. The supermarket

industry now services many customers through online food

shopping over the Internet. We understand that shopping online

can feel risky and uncertain.

The following tips will help ensure a safe Internet shopping.



If you follow this advice on safe Internet shopping, this should

not be a problem. All purchases are made through safeand

secure servers.



It's safe to say SSL is extremely sophisticated software and

safe.

Always know where your cards are and keep them in a safe

place.



The phenomenal success of online retailers such as Amazon

and Expedia is proof that internet shopping is practiced - and

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

Of course the other major hurdle for internet shopping is

shipping charges, sometimes shipping is much more than the

product. Whether we love it or hate it, Internet shopping is

convenient, provides a wide

choice and competitive prices.



Internet shopping is a big time-saver. As mentioned above,

Internet shopping is very much like conventional in-home

shopping from catalogs or mail orders.

Despite the toughening competition, Internet shopping is likely to

continue to grow.

Chris O'neill and David Marc Fishman are the owners of

priceriot.com. Priceriot is a new online auction where prices drop as

people shop for computers

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Page | 37 Online shopping has become a craze not only in India but also in various

Western Europe cities and if experts are to be believed, the rave is a steady phenomenon for the five years down the line. Before sinking in the surveys andstatistics, let we get an idea that why online shopping is getting popular by each passing day in the global continents. Emerging prevalence of internet, growing economies and improved purchasing power of people have made online shopping a household phenomenon. All you have to do here is to select a product here of your choice, place your order, pay your amount via debit or credit card and within a week time that item will be

your doorstep.

In the status report of several authorities, the trend of online shopping and integrated sales has been increased by an incredible amount of 123.1 billion Euros in the coming three years. In the same foray, a combined annual online shopping growth rate is improved by a huge percentage of 9.6%-11% all across.

A number of factors have accelerated the growth of online shopping

growth in the countries including:-

 Improved mail order retailing

 High population density

 Extensive array of product categories

 above-average confidence in online security

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America and Western Europe are probably the biggest ever markets where a

huge population of its youth buys goods and objects with online mode

regularly. The percentage and ratio of the items purchase differ from person to person and depends upon one’s personal choice and preferences. Below

mentioned is the number of items in percent unit that buyers love to buy via the online mode of shopping.

 CDs/tapes/records (17%)  Videos/DVDs (17%)  Event tickets (20%)  Printer supplies (12%)  Books (30%)

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 Leisure travel (23%)  Clothing (21%)

 Computer software/video games (11%)

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Online Shopping in India Gives You Enticing Experience

It is a very simple and easy way to buy a lot of products through online shopping in India. In fact, these stores offer various payment options as per the customer's suitability. Simultaneously, you can compare the product's price and features from among products being offered at several online shopping stores in India.

India has been a dominating power in the world of online shopping in the recent times and is widely known for its niche reputation in the global arena. It is all due to its far reaching excellence in the field of online marketing that has managed it to gain a competitive edge over its close competitors. Alongside, it is also heavily responsible for bringing about an unprecedented boom in the field of online marketing. Online shopping in India is a very simple and easy way as whatever you like to buy, you can order online and receive at your doorsteps.

While opting for online shopping in India, you can seek valuable advices and suggestions from your family and friends. Alternatively, you can simply ascertain your requirements, look out for the product over the Internet that caters best to your requirements and buy the one that is available at the most reasonable cost. Online shopping India is highly preferred by countless people, since it not only enables them to shop in the comfort of their homes, but it also gives them due value for their money along with safe and secure payment

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modes such as PayPal, credit card and more.

Information related to costs, features and specifications of numerous items including baby products, jewelry, health equipments, mobile phones, computer and myriad of other electronic devices are provided on various websites. For making your online shopping experience the best and most satisfying one, you can browse through innumerable websites that offer all these and many more products. You can compare products from multiple online shops and buy the one or more that suit your requirements at the most competitive rate. If you want to make any query, there is nothing to worry about as some reputed online shops may also offer 24X7 online support to their customers to solve their queries.

Other Advantages of Online Shopping India Include

:

- You can read other users' reviews and take ideas about the product you want to buy

- You can save a lot of your time and money as you are not moving outside your home

Thousands of websites related to online shopping in India have been designed to fulfill the needs of different customers. The manifold benefits that you get are simply incredible. Many leading online stores are offering products at discounted rates in order to promote their products among people across the world.

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India Online: How the Fastest Growing Economy is Powering

the Fastest Growing Communications Industry

In the heart of the Himalayas lies Leh, a small mountain town cut off by snow most of the year and only accessible in summer via a precarious cliff road. Despite Leh’s isolation every shop front, garage door and spare wall is adorned with Vodaphone and Airtel logos. In India it is difficult to move without seeing an advert for a telecommunications company. To say that the

telecommunications industry is booming in India is very nearly an

understatement. Since 2000 the industry has attracted $10 billion dollars of foreign investment and now employs over 9 and a half million people.

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The isolated town of Leh. Photo by Ben Semens

In India the number of users online remained below 10 million until relatively recently. To put things in perspective the number of Indians online surpassed the 10 million mark back in 2003, whilst the US stormed ahead with the same number in 1995 and the UK in late 1998. These are very different economies, but it shows how far India has come. From an economy stunted by

inefficiencies and lack of competition, India has removed constraints and now more customers than ever are coming online. Within five years the industry is expected to be worth $100 billion and it’s not showing any sign of slowing. The sub-continent’s economy is weathering the economic storm well and thanks to a strong export market it’s expected grow a further 8% this year, allowing

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However India still has a steep climb out of poverty. In India at the moment only 1% of the population have broadband access, a few million more users than in the UK despite the fact that the UK has a population a fraction of the size of India. But the situation is not quite as severe as these figures may

suggest because any of India’s Internet users connect via mobile phones. There are nearly 800 Million wireless subscribers compared to only 11 million wired users, this significantly boosts India’s online population.

But India’s users may also be holding growth back. Few Indians have credit cards, which makes it difficult for online shopping to function. That said,

advertisers don’t have this problem and services such as YepMe, India’s answer to local search, appear to be flourishing. Given time and room to expand the sector will surely find ways to innovate around the payment issue.

Over the next five years the government is planning on rolling out its National

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Deregulation if boosting competition incentives are being given to green technologies. So despite the challenges India faces the telecommunications industry is poised undergo huge growth over the next decade and if it can

innovate around the payment problem the customer base is practically limitless. When India truly comes online the Internet will swell to nearly twice the size and will be a strikingly different place. No longer dominated by western-based companies the Internet will be reshaped as Indians create their own web to suit their own needs.

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CHAPTER-2

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Review of

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2.1 Review of literature

Petrovic Dejan (2006) in his study on Analysis of consumer

behavior online explained that the most relevant behavioral characteristics of online consumers and examine the ways they find, compare and evaluate product information. Comparison of the newly collected survey data with the existing consumer behavior theory resulted in detection of a number of issues related to a specific consumer group. The purpose of this report is to translate these finding s into a set of implementation activities on strategic and technological level. Execution of these recommendations will result in better conversion of visitor s into customers and encourage customer loyalty and referrals .The focus group of this study will be young adults aged between eighteen and thirty -four interested in buying a mobile phone or a

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Page | 50 Shun & Yunjie (2006) in their study showed that there are

product types, which are more likely to be sold online such as software, books, electronics and music. Reason for this is that when purchasing these types of products, one does not require personal inspection and most, if no t all features, can be outlined in the product description and images. Most products in the mobile phone family belong to this category. Accor ding to the recent research on consumer behavior on the Internet users there are four distinct consumer groups with different intention s an d motivation :

 Exploration

 Entertainment

 Shopping

 Information

Music Videos, Lyrics - Daily updated collection of music videos an

d lyrics. Majority of young adults interviewed for purpose of this research tend to be active information seekers. A high level of technological confidence within this group tends to be an encouraging factor when it comes to product information research online .The following analysis presents both, focus group results and behavioral theory in a parallel fashion divided into two main research topics:

Information Retrieval and Search Patterns

Perception of Product Information Online These two areas is mutually dependent and particularly important in a market where consumer s have the power to choose the right product from a number of competing suppliers . Well-structured product information that cannot be found easily online is as much of a problem as is having easily accessible information that does not meet the consumer's expectations

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Page | 51 Anders Hasslinger ; Selma Hodzic ; Claudio Opazo (2008-02-01) in

their study they showed that developed into a new distribution channel and online transactions are rapidly increasing. This has created a need to understand how the consumer perceives online purchases. The purpose of this dissertation was to examine if there are any particular factors that influence the online consumer. Primary data was collected through a survey that was conducted on students at the University of Kristianstad . Price, Trust and Convenience were identified as important factors. Price was considered to be the most important factor for a majority of the students. Furthermore three segments were identified, High Spenders, Price Easers and Bargain Seekers. Through these segments we found a variation of the different factors importance and established implications for online book stores

Harris Interactive ( 2009) in their study of online customer

experience. The survey found that online customer experience reached an inflection point in 2009. The percent of consumer s who have experienced problems when conducting transactions online showed its first substantial decrease in five years from approximately 87% in all previous Tealeaf surveys to 80% in 2009. While the percent of consumers experiencing online transaction problems, at 80%, remains high (the potential online shopping dollars impacted by transaction problems rings up at $47.6 billion), this improvement points to a growing business focus on delivering better customer experiences. The survey sheds light on forces driving this accelerated online customer experience focus, including the down economy and increased consumer power due to experience-sharing via social media. It also

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examines consumer behavior when transacting online, call center behavior elated to online issues and mobile commerce. Verticals represented in the findings include retail, insurance, travel and financial services

San Francisco, CA – 6th October 2009 - the leader in online

Customer Experience Management software (CEM), today announced the results of the 5th annual survey of on line consumer behavior, commissioned by Tealeaf and conducted by Harris Interactive® [results available at www.tealeaf.com/Harris]. The survey found that 48% of U.S. online adults say that they are now conducting more on line transactions than they did in the past given the current economic climate. However, 80% of adults who have conducted an online transaction in the past year experience problems when doing so in 2009. Previous Tealeaf surveys have consistently shown that approximately 87% were affected .

This improvement over prior year s may be attributed to a growing business focus on delivering better online customer experiences. While this reported decline in on line transaction issues is good news, online customer experience is still very much a work in progress. The percentage of consumers affected by issues such as error messages (38%), endless loops (19%) and login problems (28 %) is still extremely high. Further the 1resulting business impact is significant, as 32% of those who experience issues when conducting transactions online would simply take their business elsewhere (to either an online or offline competitor) or abandon the transaction entirely. In 2009, $47.6 billion will potentially be impacted by online transaction problems, on U.S. shopping websites alone.

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Page | 53 Bikramjit Rishi (2010) in their study on Online shopping is an

innovative option of distribution available in the hands of marketers. It is innovative an d creative because marketers can experiment with it in form, content, visibility and availability. In India online shopping is considered as a relevant alternative channel for retailing and it is now an important part of the retail experience. This research study is an empirical study to find out the motivators an d decisional influencers of online shopping. The sample has been selected from the youth population as this group of people actually use internet to buy online. The study highlights that reliability; accessibility and convenience are the major motivator factors which motivate the Indian consumer to buy online. Similarly, reluctance and preference are the two decisional factors which in fluence the decision.

Kamali and Loker (2002), in their study Intern et retail sales

represent a new and increasingly vital commercial milieu. E-commerce or electronic E-commerce saw sales revenues grow 12 .1 percent in 2001 to $ 31.4 billion a figure expected to reach $ 81.1 billion by 2006 ( Kamali & Loker, 20 02). While it is clear that many more consumers are electing to shop online than in the past a shift in behavior that may be due to the sense that online shopping is safer and more secure than it was initially and to the adoption of

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alternative shopping avenues. This essay will examine these issues, arguing that browsers become buyers in cyberspace as perception of safety, product quality, and retailer reliability increase an idea also advanced by Li, Lu o, Lepkowaska-White and Russell .

Atanasov (2001) in their study it is anticipated that the worldwide

mark et for business-to-business and business-to-consumer e-commerce will total $3.1 trillion in 2004 as compared to $ 350.4 billion in fiscal 2000-2001. Among the most profitable products and services sold online are consumer goods such as books, videos, music, computers and other tech products, and travel (Schmerken, 2001). Other profitable sectors include investment transactions, which Schmerken (2001) considers to have generated a wave of corporate spending on e-commerce. The Internet and its myriad e-commerce or marketing sites, represents what researchers believe to be the security concerns of online shoppers and potential shoppers. These researchers and others reported that online buyers are also concerned about security issues when making online purchases. Though many consumer concerns regarding the inherent safety of financial transactions online have been resolved through the development of sophisticated encryption programs, many consumers require additional assurance that their financial data will be held in confidence. Other security issues that were identified by Mauldin and Arunachalam (2002) focus on retailer disclosures, information risk, product risk, and familiarity with the retailer and the product. Generally, Mauldin and Arunachalam (2002) found that intent to purchase rather than merely browsing online increases in direct association with a sense of security and comfort. Retailers who offer their products online are therefore advised to emphasize product disclosure and retailer disclosure and reduced information risk in their e-commerce sites. Though most online retailers do provide clear descriptions of security procedures, some

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Internet shoppers still avoid using credit cards online. Overcoming resistance to this fear is one of the key tasks that must be under taken.

Ogenyi Ejye Omar, Alan Hirst (2006) in their study they

evaluates women's attitude as an overall inclination towards apparel shopping online via e-mail questionnaire. Its findings suggest that women generally show positive attitudes towards shopping online for apparel. Women who shop for apparel online are aware of some of the discouraging features of online shopping, but these features do not deter them from buying online. The implication for online retailer s is that they should focus on making the experience of online shopping more accommodating and more user -friendly. This is important because the positive features of online shopping ('convenience', 'usefulness', 'ease of use', and 'efficiency') appear to be more important than the negative features ('lack of security', 'privacy of information' and 'online fraud').

Ruiliang Yan, John Wang (2009) in their research it provides a useful

framework to help business marketers identify the effect of consumer online purchase costs on firm performances in online and traditional channel competition. A game theory model is developed to determine the optimal strategies for online and traditional retailers. We

demonstrate that consumer online purchase costs always have a valuable impact on firm profits, and further show that consumer online purchase costs always have a much more valuable impact on firm profits whenever the traditional retail transaction costs and the product web-fit change. We also find that consumer online purchase costs have a greater impact on the retailer's profits in a Stackel berg competitive system than in a Bertrand competitive system. Based on

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our results, managerial implications are discussed and probable paths of future research are identified.

Scott M. Smith, Chad R. Allred, William R. Swinyard(2008)

in their research paper they discusses online shopping in context of diffusion of innovation theory. It proposes that online shopping is a discontinuous innovation whose adoption rate is influenced by several of Rogers' (2004) diffusion deterrents. A new 12 -item

'Computer Competence Index' (CCI) is proposed and tested using data from an intern et-administered US probability study of 1800 online users. E-Shoppers are profiled using a tertile split of the CCI . Each textile’s demographics, computer activities, computer-oriented lifestyles, and online purchase activities are reported. Evidence is presented that concepts related to the diffusion of innovation may explain resistance in the growth of online shopping

A.M. Sakkthivel (2009) in their research paper aims to identify the

impact of demographics on consumer buying behavior towards online purchase of different products based on the involvement and investment (High , Medium and Low). It attempts to unearth the impact of the demographics on online purchase which is at present relatively limited. It would help the marketers to identify the demographic profile of consumers which is otherwise not known due to the intangible nature of internet. The findings would help the marketers to design their offerings based on the demo graphic profile of online consumers and would help the online marketers to identify and segment the online consumers which will enhance their focus and eventually leads to financial growth.

Jianwei Hou, Cesar Rego (2007) in traditional auctions, it is often

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However, since most online bidders are average consumers instead of professional bidders, we suspect that online bidders are a heterogeneous group. The purpose of this paper is to explore the types of online bidders based on their real bidding behavior in the context of consumer -to-consumer online auction mark et. A cluster analysis is employed and four types of online bidders are finally identified in a private value auction, namely, goal-driven bidders, experiential bidders, focused bidders, and opportunistic bidders. The profile and performance of each group are also discussed.

Tomomi Hanai Takashi Oguchi (2009) , in their study to

investigate what kind of information contributes to trust formation in online shopping. Twenty-seven female undergraduate students were recruited and asked to evaluate the trustworthiness of 20 online shopping websites. All the online shopping websites dealt with branded products where there is greater emphasis on the trustworthiness of online shops or products. The results show that information described on the websites was classified into two categories, firstly, information about the shop and its procedures and services. Secondly, the concrete information necessary for the consumption process, such as payment information and return information, which heightens the reliability of these shops . The term “brand” originally refers to a “description or trademark which indicates a type of product made by a particular company.” However, in modern Japanese society it refers to those branded products that are perceived to have a higher quality than other similar products. Thu s, the term “brand” authenticates that its products belong to a high -class, and the people who possess these branded products are regarded as “exclusive people” through the “basking -in-r effected glory process” (Cialdini, Borden, Thorne, Walker , Freeman, & Sloan,

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1976). The branded products interest female young people and recently they have been more inclined to purchase them via online shopping. However, they tend to refrain from purchasing these products via online shopping due to their distrust of it. Consequently , it becomes more and more important to analyze what kind of information contributes to trust formation in online shopping. Female Undergraduate Students Attitudes toward Branded Products First, we introduce several surveys for determining the attitude towards, and ownership of, branded products among female young people, especially female undergraduate students in Japan, who are the target group of this study. Info plant (2007) showed that nearly half of all people are interested in some branded products. Although branded products generally attract the attention of

various kinds of people, young females are especially interested in branded products.

Info plant (2007) revealed that more than 60% of females under 20 years of age and nearly 80% of females in their twenties have purchased some branded products. Furthermore, the percentage o f people who usually buy new branded products is about 20% among females under 20 years of age and more than 10% in females in their twenties.

.

David Anderson (02.02.2006) in their research carried out by a

consumer behavior researcher at Henley Management College has investigated what drives people to search online. The findings reveal that convenience, time-efficiency and personal control are the key drivers for consumers to search online, rather than cost. It also shows that the relation ship between traditional and online retailing outlets needs to be more unified E-shopping has changed the face of retail, and surfers are now looking for spring sale bargains. This is

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following a bumper e-Christmas, where Internet shopping soared almost 5 0% during the 10 -week run-up to Christmas 2005 (IMRG).

However, the new findings reveal that convenience and personal control are the key drivers for consumers to search online. Dr Susan Rose, from Henley Management College, said: “What motivates online shoppers is the ability to shop, where, when and how they like. Nowadays people can shop over their Shreddies in the morning.

The research, that analyses data from 304 electrical goods Internet shoppers, provides businesses with a guide to getting the information highway buzzing with potential customers. Big-ticket items such as digital TVs, cameras, or iPods now feature on our e-shopping list. The Internet provides a rich source of information about brands and retail channels that enable us to search and find information to help us with our final purchase decision. For businesses there are some steps to help them embrace the Internet revolution with success. A key factor driving Internet use for online window shopping is its usefulness in our personal lives. The Internet frees time and makes the

information search process,Research suggests that people search online for some goods, yet buy from a traditional high street retailer, or look around for goods in shops, then take their search online. In turn, it is essential for retailers who operate both on and off line to ensure that they embrace a joined up process that appears seamless to the customer. Some retailers have still to successfully unite the two retailing methods - this is key to contemporary customer service. Factors such as how much the medium challenges us mentally and our confidence to navigate and understand the technology can turn us on or off the idea of browsing online for products. A clear divide is appearing between the occasional online shopper and the regular experienced user. Concerns about how easy the system

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is to use have almost disappeared for online shopping enthusiasts, but for occasional user retailing sites need to be easy to navigate. Websites must be accessible and operate efficiently. The research found that the expectation of getting a good financial deal is still a strong motivator to seek out pro ducts online, but this is secondary to the importance but, many people steer clear of electronic buying because of security worries. Only once online retailers can reassure customers about fraud and privacy, will the online shopping curve really take off. Worries about the risk involved, in terms of financial transaction and privacy remain. A move from big brands to , bargains may only take place once.

Rajeev Kamineni (JAN 1999) in their study The World Wide Web

can change human behavior and human interactions to a very large extent. Web based shopping behaviour is one major example to point out the trends in this direction. This study is of a very exploratory nature and it intends to establish the differences between several web -based shoppers from different parts of the world. Several critical factors associated with online shopping behaviour will be explored. A cross cultural data set will be collected and an illustrative description of the shoppers will be provided. As a final step the cross cultural differences between several shoppers will be explored. One question which will run as a theme throughout the course of this paper is, “Will the traditional consumer behaviour theory and

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research be altered by the advent of web based shopping?”

There is a huge difference between a physical store and its electronic counterpart. A help button on the home page of the web-shopping site replaces the sales clerks friendly advice and service. The familiar layout of the physical store becomes a maze of pull down menus, product indices and search features. Now more than ever, the promise of electronic commerce and online shopping will depend to a great extent upon the interface and how people interact with the computer. At the same time, there are some inherent difficulties in maintaining an online inventory. In a regular store, the managers can pull out a product from the shelf if they feel that it is not fast moving or has no demand. This is a privilege that cannot be extended to the online retail store.

Anita Desai (2003) in her study E-tailing is the practice of selling

retail goods on the internet. It is the abbreviated version of “electronic retailing” which essentially constitutes business to consumer transaction. While the concept of online retailing or e-retailing is no longer in its nascent stage; it continues to evolve, as advanced e-commerce applications act as a potent catalyst in the development of e-tailing.

The idea of online retailing or e-tailing which almost every net-savvy individual is familiar with; offers a convenient mode of shopping online and the consumer gets to choose from a diverse range of products and services as opposed to the analogous physical shopping experience. Furthermore, online retailers or E-tailors get to expose and sell their products to a global audience through their e-stores. (Also termed as online stores, internet shops, web shops etc.) The E-commerce industry plays a vital role in its growth and

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development. The consumer or buyer is usually provided with detailed information and description of the product which helps them make a judicious choice before making an online purchase. For consumers who face a paucity of time or want a diverse range of products to choose from, e-tailing proves to be an ideal option. Every e-tailor wants his/her share of domain amidst the vast World Wide Web galaxy. Due to the intense competitor quotient involved, every e-tailor out there wants to offer their customer/buyer a smooth and pleasant shopping experience. Therefore, e-tailing is just not restricted to putting up products for sale for consumers to buy. As consumers today are well-informed, it is understood that they would make a well informed decision as well. This involves a fair amount of product research, price comparison and checking the credibility of the e-store

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3

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NEED

OBJECTIV

ES SCOPE

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