Analysis of Factors Affecting Online Shopping

Introduction

Indian consumers as a whole spend about 55% of the total consumption expenditure on food items. According to a survey conducted by ORG , the expenditure on non-food items has recorded large growth that the expenditure on food items. Consumers decide whether , what, when, from whom, where and How much to buy. They can avail various mediums to buy the products.

But currently we are living in the age of internet. According to a study , “About 44 percent students use Internet in India and overall 72% of young people access Internet on regular basis. Due to the vast usage of Internet, the buying patterns have been changed. It has changed the way goods are purchased and sold, resulting to the exponential growth in the number of online shoppers. However , a lot of differences concerning online buying have been discovered due to the various consumers’ characteristics and the types of provided products and services.

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Attitude toward online shopping and goal to shop online are not only affected by ease of use, usefulness, and enjoyment, but also by other factors like consumer individuality, situational factors, product distinctiveness, previous online shopping understanding and faith in online shopping. Therefore, understanding who are the ones consuming and why they choose to use or keep away from the Internet as a distribution channel, is a critical matter for both e-marketing managers and consumer thinkers.

There are lots of companies which are providing the platform to consumers to buy the products through online. Online consumers tend to be better educated. Higher computer literacy makes internet shopping smarter. Their awareness about the internet also makes them better positioned to identify and take decision for products and services. By the internet, consumers find that they no longer have to accept fixed prices for the products and services and through the click of a few buttons the lowest priced, highest quality product can be found.

The concept of online shopping developed gradually, after the launch of the World Wide Web. Charles Stack was the first person to create an online book store in 1992. Even Pizza Hut opened an online pizza shop, whereas eBay and Amazon took the concept of online shopping to an entirely new level. Online shopping began in full swing since the year 1996.

Overall, 71 million users accessed Internet in year 2009, with 52 Million “active” users who accessed it atleast once in a month.

The first benefit that a customer derives from e-retailing is convenience as it saves time and efforts for today’s time starved customer at the same time providing a plethora of choices for wide category of items and also the luxury of comparing the offerings from different vendors – all at the click of his mouse. Another most obvious benefit of online shopping is the significant discounts that most of these e-retailers provide to attract the customers. Also online stores are usually available 24 hours a day and not limited by global time differences.

Searching or browsing an online catalog can be faster than browsing the aisles of a physical store. Along with information about a company and its products, buyers can also have better access to product review and rating systems. However, many people still locate information on the internet and purchase products offline at traditional stores, conversion rate being very low. Research shows that between 65% and 75% of consumers that initiate an online tran saction fail to complete the transaction. Online shopping is the process consumers go through when they decided to shop on the Internet.

The Internet has developed into a “new distribution channel (Hollensen. 2004) and the evolution of this channel has been identified by Smith and Rupp (2003) to be the most significant contribution of the information revolution. Using the Internet to shop online has become one of the primary reasons to utilize the Internet. Combined with searching for products and finding information about them (Jomes 2003). Smith and Rupp (2003) also state that the consumers have never had access to so many suppliers and productiservice opinions.

Problem

At any given time there are millions of people online and each of them is a potential customer for a company providing online sales. 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 have 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. The importance of analyzing and identifying factors that influence the consumer when he or she decides to purchase on the Internet is vital.

Since the Internet is a new medium for there have been new demands set by the consumer. That is why it is crucial for the online retailers to know what influences the online consumer.

Objectives of the research

• To determine the factors affecting consumer behaviour towards E- Shopping.
• Of the determined factors identify that have major impact on consumer purchase intent.
• To study the product segments preferred during online purchase. Research Approach There are two most commonly used research approaches, the inductive and the deductive method.

The inductive research method attempts to set up a theory by using collected data, while the deductive research approach attempts to find the theory first and then test it to the observed data. We chose a deductive research approach for our study as we would move from the more general to the specific

Methodology

Initial Phase

• The first step towards our research was to decide on the factors which we will consider for our study. With the resources and the time available we decided to go ahead with the following factors:
• Experience on computers

Comparison with Offline channel

• Security of Information
• Money Savings
• Convenience
• Variety
• Previous Experience
• Service of Website
• Product Availability

The above factors are made the independent variables and the purchase intent is the dependent variable which would be explained by:

• Online shopping intent.
• Overall perception of online shopping.

Hypothesis Formulation

• After determining the factors we made the hypothesis for our research which would be mentioned in the later section.

Data Collection Phase

The next step was to develop a Questionnaire (Annexure-1) that asks questions to the respondents on the above mentioned parameters and also on the products they prefer for online shopping. ? The Questionnaire was designed on the Google docs and the survey was started. Analysis Phase ? After the collection of data (Annexure-2), each factor was tested for normal distribution. ? The process of testing the hypothesis was based on the regression model. Interpretation Phase ? The results from analysis were interpreted and relevant factors were drawn out. ?

The research is concluded with the findings.

Hypothesis

The following are the hypothesis made by us for our research, the model would be based on the assumption that independent variable has a linear relationship with the dependent variable : Null Hypothesis for all tests: H0: Variable has no relation with online shopping intent. Alternate Hypothesis:

• Security of Information will affect the online purchase intent.
• Variety of Products affects the online purchase intent.
• Web Site Quality affects the online purchase intent.
• Money Savings affects the online purchase intent.
• Convenience affects the online purchase intent.
• Discounts Available affects the online purchase intent.
• Time Savings affects the online purchase intent.

Analysis

The first task is to prepare a questionnaire that asks questions to the respondents and on the basis of their responses we can accept or the hypothesis. The detailed questionnaire is given in Anexxure-1. At the last of our questionnaire, we have a question measuring the online shopping intent.

The responses would be used to measure dependent variable. Reliability: Since the Cronbach’s Alpha is >0. 7 the data is reliable. Normality: The output sheet (Normality. spv) attached with this report contains the histogram and the normal distribution curve One Sample T-test: One sample T test was conducted to know the significance of these factors and results are shown in the table . And it is evident that p value (0. 000) is less than significance level of 0. 05 for all the factors. 7

Hypothesis Testing

Variable has no relation with online shopping intent.

Security of Information will affect the online purchase intent. Since sig. value < 0. 05, as confirmed by above tables. The null hypothesis is rejected, hence online security has a significant relationship with online shopping intent.

 Variety of Products affects the online purchase intent. Since sig. value > 0. 05, as confirmed by above tables. We fail to reject null hypothesis , hence product variety has no significant relationship with online shopping intent.

Web Site Quality affects the online purchase intent. Since sig. value < 0. 05, as confirmed by above tables. The null hypothesis is rejected, hence web site quality has a significant relationship with online shopping intent.

Money Savings affects the online purchase intent Since sig. value < 0. 05, as confirmed by above tables. The null hypothesis is rejected, hence web Money saving has a significant relationship with online shopping intent.

Convenience affects the online purchase intent Since sig. value > 0. 05, as confirmed by above tables. We fail to reject null hypothesis , hence Convienence has no significant relationship with online shopping intent.

Discounts Available affects the online purchase intent  Since sig. value > 0. 05, as confirmed by above tables. We fail to reject null hypothesis , hence Discounts and offers has no significant relationship with online shopping intent.

Time Savings affects the online purchase intent Since sig. value < 0. 05, as confirmed by above tables. We reject null hypothesis , hence Time saving has no significant relationship with online shopping intent.

Demographics Analysis

What are the category of products most preferred by consumers during online purchase ? This shows that majority of consumers purchase Electronics goods followed by Books and Apparels. How often do consumers go for online shopping (Frequency) ? This concludes that majority of consumers shop once in a month followed by once in six months. How much consumers spend in online shopping?

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