SYNOPSIS Subject: ONLINE SHOPPING IN INDIA

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Topic: Online Shopping in India OBJECTIVE:

1. Studying the explosive growth of the Internet and the World Wide Web, combined with the rapid emergence of electronic commerce (e-commerce), has led to the growth of the online shopping. But still online shopping contributes a minor part of the online activities. 2. Online behavior is affected by demographics i.e. by gender, education and income. 3. To identify what factors determine whether Internet users choose to buy or not buy online and how frequently they make such purchases. Analyzing the importance of satisfaction level in the online purchasing environment. 4. Future and growth of Online Shopping.

HYPOTHESIS:

In order to address the problem in the most effective manner the hypothesis for this research project is as follows: 1. More male Internet users are frequent online buyers than female Internet users. 2. Regular online buyers are better educated than occasional online buyers. 3. Income is higher in case of regular online shopper than occasional online buyer. 4. Consumers who make frequent online purchases are higher in convenience orientation than those who purchase occasionally.

RESEARCH METHODOLGY:
A combination of primary and secondary research techniques would be used to meet the objectives. Secondary data would be collected from magazines (like Business world, Pitch India Today, Internet World, PC Quest, Data Quest, etc), newspapers (Economic Times, Hindustan Times, Times Of India, etc), required journals and library of CII and FICCI. The primary research would be conducted across Delhi through surveys among all the people within any age group who uses Internet. Any person who met these criteria would be a potential sample unit for the survey. Exploratory or Qualitative Research tool would be used, which can help better understand and gain data that, shows how consumers make online shopping. These methods would help to reach an answer and come up with results to prove the findings. Two hundred surveys would be conducted because it is considered to be a large sample size to serve the purpose of the research. A non-probability sample group would be used and the surveys would be mailed and distributed among the Internet users.

Scope:
Since online shopping is growing tremendously in the current business scenario it is empirical to study how consumers make purchase decisions on the Internet. With the advent of Internet shopping, consumers are faced with an overwhelming amount of product offerings, and consequently have a greater degree of freedom to choose among many different alternatives. Internet shopping carries a number of different characteristics than traditional shopping methods. In India the Internet has taken root and grown along many fronts in the past decade. The research assumes significance since marketers have endeavored to cater to this growing segment of consumers. This study among the Internet users will help marketers to plan highly focused online campaigns in the future.

Data Analysis and Interpretation:

The extent by which data analysis done would depend on the amount and quality of data collected through primary and secondary research. Principle objective in such a process of data analysis would be the use of statistical tools wherever required which could include the use of worksheets in excel. This would involve extensive discussion with industry representatives to get an accurate and valuable opinion. Based on the analysis suitable analysis and recommendations would be fixed.

Draft report formulation:

The draft report prepared will contain the outcome of the entire research. It would be validated by the guide and thereafter acceptable conclusions would be drawn according to the study.

Final Report formulation:

The final report will then be prepared and validated by the guide.

Report submission:
Thereafter the approved copy of this report will be submitted to the Institute and guide in the required number of copies prescribed by the esteemed institute.

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ABSTRACT
The concept of e-shopping has indeed matured since the fire and ice years of 1998-2000. It is no longer a euphoric technology and forms the bedrock of most the businesses. Banking, travel, entertainment, shopping, e-mailing, etc all form the part of a new mode in which the society interacts.

The number of people and hosts connected to the net has increased worldwide. In India too, Internet penetration has became more widespread. Online shopping though a small proportion of the Internet activity is believed to increase in the coming years. Some of the prominent factors leading the change are greater Internet penetration, fall in prices of hardware, fall in the price of Internet communication, development of better and more reliable technologies, and increased awareness among the users. Some of the various ways in which online marketing is done in India are company websites, shopping portals, online auction sites, etc.

This paper attempts to track the preferences of the new age Internet savvy Indian consumer and thereby studying the behavior of the online shoppers in India. An empirical study was undertaken to capture a snap shot of the online shopping habits among the online shoppers. The paper provides details of the research methodology including questionnaire design, target sample, data collection and data analysis.

CONTENTS
Page No.
INTRODUCTION ONLINE SHOPPING IN INDIA Section A Overview Section B Recent Developments Section C The Online Activities Section D Drivers of growth Section E What does Indian Consumer Shop Online? Section F Potential benefits of Online Commerce Section G Barriers to Online Shopping and the steps taken Section H Future of Online Shopping RESEARCH METHDOLOGY ANALYSIS & FINDINGS CONCLUSION RECOMMENDATIONS LIMITATION BIBLIOGRAPHY ANNEXURE 40 46 50 74 78 86 88 90 28 32 36 10 14 15 16 19 24

LIST OF FIGURES & TABLE

FIGURE 1 FIGURE 2 FIGURE 3 TOTAL PURCHASE ONLINE FREQUENCY OF ONLINE PURCHASE ONLINE SHOPPING & INTERNET USAGE BY YEARS FIGURE 4 ONLINE SHOPPING & INTERNET USAGE BY HOURS A WEEK FIGURE 5 FIGURE 6 FIGURE 7 FIGURE 8 FIGURE 9 ONLINE ACTIVITIES ONLINE ACTIVITIES BY AGE ONLINE ACTIVITIES BY TIME ONLINE SHOPPING & GENDER ONLINE SHOPPING & EDUCATIONAL QUALIFICATION FIGURE 10 ONLINE SHOPPING & INCOME FIGURE 11 ONLINE SHOPPING & MOTIVATING FACTORS FIGURE 12 BARRIERS TO SHOPPING ONLINE FIGURE 13 CONVENIENCE-THE MOTIVATING FACTOR FIGURE 14 SATISFACTION INDEX FIGURE 15 PRESENT AND FUTURE CATEGORIES 63 64 65 66 60 61 59 54 55 56 57 53 51 52

OF GOODS TABLE 1 FUTURE CATEGORIES OF GOODS

69 70

INTRODUCTION

The popularity of interactive media such as the World Wide Web has been growing at a very rapid pace. Over the past few years, the development of information superhighways and global networks has increased. Amongst the various global networks that exist, Internet has been referred to as the network of networks. It is composed of a large number of individual networks run by a variety of organizations including government, academic, research and commercial organizations which provide access to e-mail, bulletin boards, databases, library catalogues, chat lines, multi-user domains, discussion groups, etc. The main reason for its increase is because more companies in todays world is seeking to use the World Wide Web (WWW) to communicate with its customers and the rapid adoption of the WWW by the consumers for a variety of purposes including prepurchase information search and online shopping. In India too, the Internet has taken root and grown along many fronts in the past decade. It has opened up opportunities for consumers as the medium is used to achieve social, business and development objectives and for the software creators to craft technology solutions based around the Internet to establish India as a powerhouse for innovation.

The Internet is emerging as a powerful communication medium and distribution channel in todays high-end environment especially in India. Consumers utilize the Internet mainly for sending and receiving mails, product information, for travel information, online trading, etc. They usually start using the net for low value items such as books and CDs and

gradually move on to jewellery and home appliances. Online shopping has grown by leaps and bounds as one can buy almost anything from food to fishing equipment, right through the computer. In general, advantages of online shopping as perceived by consumers include convenience, product availability, price, easy and abundant information access.

E-commerce may not have taken off in India the way it should have, yet prospects are bright. India is expected to be the third largest Internet market in the world in the next five years (Source Ac Nielsen). The advantages are there for both buyers and sellers and this win-win situation is at the core of its phenomenal rise, as it is believed that e-

commerce transactions will represent the largest revenue earner especially in the business to consumer (B2C) segment in India.

This paper is focused on the recent developments in online shopping among the buyers in India, the factors that influence the browsing and buying behavior of individuals while shopping online and how frequently they make such purchases. The paper also focuses on the main reasons, which concern the online shoppers and the categories of products and services, which are popular among the buyers.

The research assumes significance since marketers have endeavored to cater to this growing segment of consumers. The continued rapid expansion of the Internet with an estimated one million new members per month is leveling the playing field and creating opportunities for entrepreneurs in India. The hope is that online shopping will result in fewer trips being made, thus contributing to relief of congestion, reduction in air pollution,

and fewer demands for retail and parking space. While online shopping is still in its infancy in India, but the rapid increase in online shopping shows that the real impact might be felt in the near future. Though there are some weak links, with improvements in technology, it is believed it would iron out, making the e-commerce easy, convenient and secure. The ecommerce is certainly here to stay and will increase exponentially in the coming years.

ONLINE SHOPPING IN INDIA

SECTION-A OVERVIEW
The birth and growth of Internet has been the biggest event of the century. E-commerce in India has come a long way from a timid beginning in the 1999-2000 to a period where one can sell and find all sorts of stuff from a high end product to a meager peanut online. Most corporations are using Internet to represent their product range and services so that it is accessible to the global market and to reach out to a larger range of their audience.

Computers and the Internet have completely changed the way one handles day-to-day transactions; online shopping is one of them. The Internet has brought about sweeping changes in the purchasing habits of the people. In the comfort of one's home, office or cyber cafe or anywhere across the globe, one can log on and buy just about anything from apparel, books, music and diamond jewellery to digital cameras, mobile phones, MP3 players, video games, movie tickets, rail and air tickets. Ease, simplicity, convenience and security are the key factors turning the users to buy online.

E-commerce revenues in the country are projected to reach Rs 2,300 crore in the year 200607, growing at 95 per cent over 2004-05(Source: Internet and Mobile Association of India, IAMAI). This pertains to the business-to-consumer (B2C) segment. It may be too early to do a comparison with the e-commerce scenes in countries such as the US where billions of

dollars are spent online but the business in India is growing exponentially every year, albeit from a smaller base, the total revenues have reached a respectful size.

SECTION-B RECENT DEVELOPMENTS

The number of users logging on to the Internet is growing by leaps and bounds. The number of Indians who are online is expected to touch to 100 million by 2007-08, from the present 38.5 million according to the research conducted by IAMAI. The numbers indicate a growing sense of comfort with the use of Internet for shopping. Accompanying this growth, there is an increasing maturity in the way people use the Internet. It's a classical curve. Online users typically start by using e-mail, gradually move on to browsing for news, information and entertainment, and finally graduate to shopping and conducting business online. Online sales have registered a huge jump and what was a concept five years ago is now beginning to hit the mainstream levels. Roughly 10 percent of the world's population more than 627 million people have shopped online at least once, in India it is just sprouted and beginning to perish. Internet is now going beyond the simple exchange of information to a shopping paradise. This medium is far bigger than expected, but many retailers and marketers are not using it to its full potential.

Indian customers are increasingly getting comfortable with online shopping, and there is a higher acceptability for the concept. India has 25 million Internet users and more is now turning to online shopping. There has been an influx of online shopping sites in India with many companies hitching onto the Internet bandwagon. The revenues from online shopping are expected to more than double by 2006-07. According to IAMAI, the average number of

transactions per month in India has gone up from 2 lakh in 2003-04 to 4.4 lakh in 2004-05 and has doubled to 7.95 lakh transactions per month in the year 2005-06. The online

sales during the festival season had increased rapidly especially during Diwali and Ramzan which recorded a sales of Rs115 crore, a 117 per cent increase from the Rs53 crore in the year 2004-05(source IAMAI). These figures clearly show that online shopping has truly come of age and consumers are keen to shop on the net. Effective customer communication on products plus reduced shipping costs and timely delivery has helped online marketers to seize a slice of the Rs 115 crore sale.

Online shopping has become the latest trend among shoppers. Indians are becoming more comfortable with e-commerce. The consumers attitude has been evolving towards online purchases. It has become increasingly positive over the years. The attitudes that drive people to shop online, such as convenience, price comparison and choice are improving tremendously in India.

Though a miniscule amount in the global context, the Indian online shoppers population would make its presence felt quite remarkably. The potential of the Indian e-market can be gauged from the fact that 16 percent of Indian consumers want to buy online in the next six months, making it the third most online-potential country after Korea (28 percent) and Australia (26 percent) (Source:IMRB). This is an indication of a growing breed of Indian consumers who are not only better equipped but also more confident of the online transactions. Indian businesses have also grown mature enough to move up the IT curve and they are considering Business to consumer (B2C) e-commerce a viable revenue model.

Some of the companies that have benefited are baazee.com, indiatimes.com, rediff.com, indiamart.com, fabmart.com, traveljini.com and sifymall.com.

Indiamart.com has witnessed a growth of more than ten times in just two years in its online gifts domain. In the online travel domain, the company was able to generate an average $8,000 worth of room bookings/month for its premium client. It is expected to touch $1520,000/month/client by the year-end, which is over 100 percent growth (Source:Indiamart). Brick-and-mortar businesses are also building up e-commerce revenues. In the year 200506 Samsung India recorded a 120 percent jump in online buying from its site over the year 2004-05 (Source: Samsung). Nirulas witnessed more than double growth in its B2C ecommerce revenues in the year 2005-06 and is positive for the next one to two years (Source: Nirulas). Companies like eBay India have seen a large increase in the number of sellers and buyers from B and C cities and in a year the eBay community (buyers and sellers) base has increased to 1.7 million users, which shows that more Indians are shopping online (Source: eBay). Online sales are currently marked by a single digit growth, but the leading garment retailers like Pantaloon, Shoppers Stop and Globus have already made business strategies to enter into the world of e-retailing. Famous apparel brand Zodiac has already started online stores. The main motive of these retailers through online sales is to reach the global markets and the small towns where they do not have the outlets. Thus the India's Internet shopping sector is preparing for a massive growth, which is fuelled by increasing broadband usage and growing e-commerce.

SECTION-C THE ONLINE ACTIVITIES

The Internet has entered the mainstream consciousness over the past decade. This has happened primarily because the web has got a graphical interface and Internet has moved from governmental control to private hands. The activities which are happening on the Internet are email and instant messaging, general web surfing or browsing, reading news, hobby searches, entertainment searches, shopping and buying online, medical information searches, travel information searches, tracking credit cards, and playing games.

Communication i.e. email, chat or instant message is the basic activity for which Internet is used. It is the single most important reason for people to go online. E-mail provides the opportunity to communicate more often with a much broader circle of people than one can reach by telephone or by mail in a convenient way. In India too email constitute the major activity on the Internet. It was found that more elderly people are increasingly using email as compared to the younger generations.

In India the top five online activities are e-mail, surfing, chatting, search and job search. Some of the sites, which are commonly used for these particular activities, are: Yahoo -Most preferred communication portal, tops for email and chat Indiatimes Best event and sports news provider. Naukri-Best recruitment portal Google-Best information domain Shaadi-Best for matrimonial services

 eBay-Best online shopping portal (Source:IAMAI) In India online trading, travel, recruitment, ticketing, real estate, classifieds and social networking are a few spheres ripe for investment.

EMPLOYMENT
Today online job search market is expanding tremendously. According to IAMAI the number of online job seekers had reached 6.5 million in 2005-06 and is expected to across 9.2 million in the year 2006-07. The market size of the Indian online recruitment industry in 2005-06 was 145 crore and it is estimated to reach Rs 241 crore for 2006-07 (source IAMAI) this is mainly because of the increase in the internet penetration which has lead to an increase in the users for whom net has become a convenient way to meet their needs. Every year thousands of graduates pass out and look for employment opportunities, for these job seekers Internet is the most convenient (24 hour a day) and the comprehensive medium to research and look for jobs. Internet is advantageous to both the job seekers (saves time and cost) and to the recruiters (easy access to the best talent pool) as a result there is a win a win situation.

BANKING & TRADING

The net banking is increasing and it is estimated that 4.6 million Internet users are using Internet for banking purposes and it is expected to grow to 16 million plus by 2007-08 (Source IAMAI). Trading stocks is also becoming a fast booming activity amongst the Indians. The traders feel that trading through Internet is not that cheap but the convenience provided by online trading is worth the costs involved. Traders can keep a regular check on various stocks and it is easier to compare them. They can not only buy and sell stocks but can also find the track record of various stocks, do technical analysis, can access live news from international news agencies such as Reuters, CNBC and can find opinions from other leading brokers which help them do decide whether to buy or sell. More and more traders today are making the immense use of these services, which shows that there is a huge potential in this sector.

MATRIMONIAL
As the popular adage goes, "Marriages are made in heaven" but today with so many matrimonial portals in the market they help one find the best match for themselves. Some of the popular marriage portals are shaadi.com, bharatmatrimony.com, Yahoo India matrimony, MrnMrs.com, Matricorp.com and jeevansaathi.com.

These marriage portals have increased because there is a rise in the career orientation among youngsters and increasing work pressures have resulted in less time for socializing. These youngsters are becoming more independent and are now making their own decision

in respect of choosing their life partners. The marriage portals provide them the medium to interact with the people who match their required profiles. These portals not only help in finding a better match but also provide with services of astrologers, decorators, wedding planners and caterers thus providing a whole lot of services in one basket. More Indians are registering to these matrimonial portals and there seems to be a huge growth in the coming years.

ONLINE TICKETING
The growth in the online travel business today is phenomenal. The Indian online travel business is worth $350-400 million and is growing at 40-50 per cent year by year, as the online population of the country is estimated to be 25 millions (Source:IMRB). There has been a significant increase in online ticket booking in India with a double-digit growth, which has also lead to an increase in Indian tourism. This growth in the travel industry has definitely leaded to the increase in the travel portals. The scope for growth is immense in this sector as more Indians are using the Internet.

Travel sites like MakeMyTrip.com (MMT) has been growing at about 20 per cent monthon-month, for the last four months, selling 1,400 tickets a day on an average (Source: MakeMyTrip.com). The online bookings in India was mainly stared because of the low cost carriers like Air Deccan which sells most of it tickets online. The revenue of the Indian Railway Catering and Tourism Corporation (IRCTC) has also increased phenomenally because of the online ticketing. The advantages of online ticketing are both for providers

and for consumers as the providers benefit from infrastructure cost while for users it is a convenient way to book tickets.

Thus Internet has become an indispensable part of life and has reduced the world to a global village. Many corporates are getting into this bandwagon, as there seem to be a humongous growth in the coming years. Airline, cinema, hotel bookings, etc are all increasingly going online. The future of online business is bright therefore companies are providing more convenient services to the consumers and thereby changing their mindsets and attitudes towards life.

SECTION- D DRIVERS OF GROWTH

Business in India started picking up from 2004 onwards. Prior to that, issues such as poor Internet penetration, slow speed of connectivity, security issues and fear of using a credit card online plagued the e-commerce in the country. But over the last two years, the use of Internet for various purposes has increased. Online shopping is one of them and it has become a popular option among the masses.

One of the biggest drivers of growth for e-commerce has come from the initiatives taken by the Government. Public sector banks and Indian Railways has started using E-

commerce for various purposes which has helped boost the confidence of the users to trade online. Banks such as State Bank of India has encouraged subscribers to log on and transact online, as a result bringing a large number of new users online. These moves have removed lot of concerns in the minds of the people about online transactions. The proliferation of broadband Internet connections is another factor that has helped e-commerce. The

cost of computers coming down drastically, as well as falling rates for connectivity, has also helped. Today, more people spend more time visiting cyber malls. Chances are that many among them will end up buying something. The shopping basket of the consumers is also continuously diversifying and the take-off of the online stock trading is another catalyst for online shopping.

Apart from infrastructure development, the maturity of the average Indian Internet user has grown which has spurred the growth of the B2C e-commerce market. While infrastructure

development is happening and will continue to happen, players have been striving to create awareness and increase comfort levels to move consumers up the IT value curve. In the last couple of years they have increasingly brought to public attention the existence of an alternative marketplacethe Internetand highlighted the benefits of buying and selling online. The arrival of global players such as eBay, MSN and Yahoo, and consolidation in the Indian B2C space, has also boosted the buyers confidence. Prominent Indian portals such as Rediff and Indiatimes are aggressively pushing their online shopping business.

Today, consumers are becoming more accustomed to purchasing online as they find discounts and deals, quality of goods, convenience, availability of standard guarantees similar to offline shopping, easy gift delivery across geographies within India and outside, and the ability to make an informed purchase decision by comparing multiple sellers and checking product details and prices. Convenience of buying is one of the most important reasons for buying on the Net. The feeling of having an entire global marketplace at ones fingertip is propelling the consumers to shop online. People have such diverse tastes and shopping online fulfills those tastes. Spurred by the improved site usability, wider product assortment, better services, and competitive prices, online shopping is increasing. Today it is easy to find products at a discount, only one needs to know how to use the computer and explore the Internet.

One factor that has really boosted the customers confidence is the progress on the payment-mode front. One of the biggest barriers of online shopping is the security aspect, which has lowered the confidence levels. More payment options and payment gateways

have been created for customers and the transaction security has been strengthened which has lead to a gradual build up of confidence in online payment. Companies like Baazee provides its users the option to pay either by cash-on-delivery, money transfer, cheques or demand drafts. The company has also launched an end-to-end payment method wherein the buyer can choose to directly pay the seller online using a third party mechanism called PaisaPay. However, at present, offline payment modes like demand draft, cheque and payment-on- delivery are more popular than online modes like credit cards and debit cards. Steps are also taken to strengthen the security aspect of online transactions. On the technology front, Secure Socket Layer (SSL) has matured from 40-bit to 128-bit encryption to make online transactions more secure.

Having gained the key insights, players have now aggregated services and products that induce people to buy online. A greater number of online retailers now have the technology, which lets their customers monitor the goods they have ordered with greater ease. Customers can create accounts, which have their order history, order tracking, notifications, wish lists and invoices of their previous purchases. Also if customers do not want to create an account, they can go straight to checkout and purchase their products. Most products are usually delivered within 1-2 working days, which eliminates the need for carrying the products especially heavy products like printers.

Thus, the key factors which are bringing the transformation in the Indian market can be summed up as better availability of IT and telecom infrastructure to the average Indian middle class consumers, higher awareness levels, and most importantly, increased comfort

levels and confidence in buying online. The growing Internet user base is one of the prime reasons for the spread of B2C e-commerce. As Internet penetration grows beyond the metros, it will bring with it more users with disposable incomes. As the use of technology becomes more widespread it is natural that relevant segments of consumers will migrate to buying and selling on the Internet.

SECTION-E WHAT DOES THE INDIAN CONSUMER SHOP ONLINE?

The shopping behavior of consumers differs across countries and depends upon the cultural and demographic pattern of consumers. This affects the choice of goods among consumers across countries. In countries like Malaysia, New Zealand, Singapore and Australia there is huge market for online booking of tickets/reservations because it is believed in these countries people love to travel and spend more on holidays whereas in Japan there is a huge opportunity for online booksellers and grocery sites. 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%) (Source: AcNielsen ORG-Marg). According to Ac Nielsen research more than 627m people have shopped

online globally in the year 2005-06 of which over 135m people had purchased DVDs and video games while approximately 135m made plane reservations, over 128m bought clothing, apparel and shoes, 112m paid for music downloads or CDs, 106m purchased electronic devices and close to 98m bought computer hardware. Today consumers are not only buying just books and music online but their shopping basket is ranging from jewellery to electronic gadgets to railways and airline tickets. Books continue to be a leading product category across the globe, but there is a possibility that many high-value items are likely to overthrow the books at the top.

Major products bought online are: books, electronic gadgets, railway tickets, accessories apparel, apparel, gifts, computer and peripherals, airline tickets, music, movies, hotel

rooms, magazine, home tools and products, home appliances, toys, jewellery, movie tickets, beauty products, health and fitness products, apparel gift certificates, and sporting goods. (Source Ac Nielsen)

Online shopping in India is poised for greater acceleration as more manufacturers and providers integrate the Internet into their sales model. The net savvy populations in India are now making more purchases online than the global average according to the research conducted by Ac Nielsen.

In India the biggest category of online shopping continues to be travel. More and more people are buying air tickets and booking their railway journeys online in todays scenario. The main reason for this is that items, which are fairly standardized with not much, to choose from (say in terms of colour) which either offer a good bargain (like air tickets) or no bargain (rail tickets) generally do well in online shopping. It is believed that these goods do well because consumers are not bothered much about the touch and feel factors, which generally drive the shopping in India.

IRCTC continues to lead the e-commerce travel space as far as the revenues and the number of transactions are concerned. IRCTC have already sold 3,88,206 tickets in March 2006 as compared to 3,343 tickets in the year 2002 when it first stared its online operation (Source IRCTC). This shows the amount of consumers who are booking online tickects. The companys revenue has doubled because of the online ticketing service, which includes cost of the ticket and service charges. The average turnover of the Railways through

Internet booking is currently at Rs 8 crore a month, of which IRCTC gets a share of Rs 40 per sleeper class ticket and Rs 60 per higher class ticket. There has been a phenomenal growth in transactions on IRCTC online ticketing site. About 1.8 lakh transactions happen every month i.e. 6000 tickets are sold every day on its site, which shows that online ticketing is booming. (Source IRCTC) It is true that this number would rise even further as more and more people today are using the Internet.

In India books, electronics and jewellery follow the travel in online shopping. Electronic gadgets are expected to become the best-selling items on the Internet in the near future because it allows people to search and compare. Consumers prefer to research high-value gadgets before buying. Indians are not only trading in India, they are also trading worldwide with international buyers of traditional Indian items such as sarees, jewellery and handicrafts. Indian banks have adapted to new technologies to provide its customers with real-time account status, transfer of funds between current, checking accounts and facility for stop payment. Banks such as the SBI and ICICI Bank are encouraging their customers to move to online banking.

Indians are believed to be very choosy when it comes to buying gifts for their dear ones as they want to see and feel the product before purchasing, but this habit is fast changing. Today more and more Indians are using the web for buying and sending traditional gifts like mithais (sweets), chocolates, flowers, wrist watches, perfumes, etc. The main reason for this is the time constraint and also the vast choices available on the net. Earlier Indian consumers bought gifts mainly to send to their relatives abroad on Diwali or Raksha

Bandhan, but now they are buying for their friends and relatives in India. The factors like personal computers (PC) and Internet penetration has lead to the growth of E-commerce in the country, but the key to increasing online purchases would still remain in the hands of the marketers as it depends upon their capabilities and innovation to attract more consumers to shop online. The increasing number of consumers flocking to shopping online has forced the business to adapt to this changing landscape.

SECTION- F POTENTIAL BENEFITS OF ONLINE COMMERCE

CONSUMERS
From the customers perspective some of the advantages of Internet-based electronic shopping relative to traditional bricks and mortar shopping are as follows:

The Internet is convenient, simple to use, hassle free.

Customers are comfortable doing things themselves because the Internet provides them with the control and convenience. As the life is getting ever more complex in so many dimensions, consumers are looking for simplicity and most companies nowadays, provide the simplicity of navigation when consumers are doing their shopping from their desk or using a lap-top. Websites operating as superstores portray ample choices thereby offering the most items on earth that one can ask from a physical shop thus helping in finding a desired item. They provide all imaginable facilities so that browsing and ordering an item on the web is a pleasurable experience for their customers. These items are classified according to different categories, as a result making shopping easy on the net. Some businesses are making this process more convenient for returning shoppers. The first time a person makes a purchase, their credit card information is saved, so that there is no need to input the information multiple times. Consumers can also subscribe to softwares from a company and receive regular upgrades to their hard drives rather than going and buying a box in a store which makes the entire shopping experience over the Internet as a hassle-

free experience. Such easy shopping has definitely changed the shopping habits of the people around the globe. Reduces the uncertainty in the purchase decision process

Online shopping benefits customers as it allows citizens from around the world to gain more information about a company and its products. Buyers have better access to product review and rating systems. These services allow potential buyers to read about the product evaluations and comments made by other consumers who have previously purchased the product thus reducing the uncertainty in the purchase decision process. Customers can evaluate all price options thus making an informed choice. For example, travel sites like the MyTrip allows customers to research flight alternatives and make fare comparisons, as well as read hotel reviews and check rates on accommodations. The sites like cnet.com, bcl.com provides the customers for online trial of products, again reducing the uncertainty in the purchase decision-making process. Web sites like Amazon.com and CDnow.com allows consumers to listen to the new artists and preview sound clips before making a purchase. Thus these efforts by the companies have increased the online shopping amongst the consumers.

It is easy to place an order over the Internet; it offers 24 hours access.

Internet offers variety that is simply impossible in traditional stores. Customers who shop online can shop when it is convenient for them, not during set hours, but it is not possible in case of traditional shopping. A potential customer can browse online catalogues without

leaving their homes or offices. The elderly and infirm have begun to realize the convenience of shopping at home.

The Internet offers competitive prices

It is found that, amongst others, good (competitive) prices were one of the main reasons for buying on-line. It allows buyers to customize their products, as well as benefit from cheaper prices. As buyers are purchasing directly from the supplier, it eliminates the need for retailers and distributors, thus making the product cheaper for the consumers.

BUSINESS
The benefits that e-commerce provides to the business are huge. E-commerce not only benefits leading brands but also small players to reach more customers all over the globe thereby enabling them to expand their business and profits to new geographies in a more cost-effective way. It serves as a starting point for businesses and helps in making a living. Today many Indian sellers from various walks of life like traders, students, retired people, women, handicapped etc are using eBay to sell their products, as there is no investment required to start a business. Sellers can choose to work according to their convenience at any time and from anywhere.

E-commerce also helps businesses to collect information about their customers through the use of cookies. These cookies help the sellers gain information about the purchasing habits of certain groups of people. This information is extremely valuable to businesses since it

allows them to target the right customer and provide them with the products according to their preferences. For example if a person has purchased books regarding tennis coaching, then a company selling sport items can use this information and offer him discount for the purchase of a tennis racket.

Another benefit that e-commerce offers to businesses is the reduced amount of overhead costs. A company that does business on the Internet has the advantage of reduced the overhead costs because it does not have to spend the same amount of money on buildings and customer service as compared to a traditional business. For example a company that provides customers to book tickets online can cut the cost of printing tickets, ticket jackets, distribution costs and reduce manpower. The relatively low cost of doing business in cyberspace provides even the smallest entrepreneur with an opportunity to compete with much larger organizations. More competition among business generally provides for the potential for better prices and quality for consumers. Thus Internet provides business the advertising space as a result they can strengthen the brand equity coupled with lower infrastructure cost, unlimited shelf space, a global audience that they can cater to without the restrictions of time zones and working hours. It helps them to sell anything from books to jewellery, airline tickets to magazine subscriptions, etc.

SECTION-G BARRIERS TO ONLINE SHOPPING AND THE STEPS TAKEN

Online shopping market is growing at a tremendous pace across the world but it is also poised with several threats. The most important challenge that e-commerce faces is the ability to guarantee customers' privacy and safety when using credit cards to purchase online. Internet crime and potential violations of personal privacy is increasing across the globe as a result a vast majority of consumers who shop online usually choose to complete their purchase over the phone for fear that their credit card information will be seen by a third party. To deal with the concerns that online customers have about security of their private information, many online companies have begun to use secure servers for future transactions. These secure servers encrypt data that is sent via phone lines so that the information cannot be intercepted by an unknown party. Many companies have gone to great lengths to assure their customers security and confidentiality, using methods such as timed log outs and firewalls.

Another problem hindering the growth of e-commerce is the impersonal way of doing business online. Buying products over the web is convenient for consumers, but it lacks the human touch that traditional shopping provide. Online shopping requires customers to change their habits but this requires huge time, as it is not easy to change the set mindset of the consumers. Especially, garment retailers who use the web for selling their products face the problems of the conventional shopping habit i.e. look, feel and experience that the consumers prefer while buying the garment. Many companies have tackled this by

introducing one-on-one human interaction when making a purchases for certain goods like telephony technology, which allows users to make telephone calls through online networks.

Technology is the other bottleneck for the growth of e-commerce. If a particular site takes a long time to load or is very slow, it can cause the surfer to get frustrated and move back to the tradition brick-and-mortar stores. Even though the speed of the connection has increased considerably, with most of the users accessing net through dial-up modems, the speed at the machine ends remains to be a concern.

In India too security is the major inhibit for online commerce, as people are still uncomfortable about revealing their credit card numbers over the Internet. Apart from the security issues still there is lot of inhibition among the consumers while shopping online this is because of lack of knowledge among the consumers. Some of the Indians believe that purchasing goods or services online is too difficult and lack of knowledge on such issues deter online shopping as they prefer to buy goods or services in a store rather than on the web. The weak supply chain and issues relating to logistics also weigh heavily on the minds of the potential buyers as delays in shipping or damages to the products do not allow the buyer to return the goods. In India consumers are hesitant in using net for shopping valuable products like jewellery because of the unreliable shipping services (like couriers and postal services), which pose logistical problems.

Apart from the obvious issues of lack of penetration of the Internet as a medium and the fear of sharing personal information like credit card details when shopping online, the other

critical issue is regarding the payment gateways. The subscription to and the implementation of the payment gateways, which are critical in a companys online business, are very expensive. For instance, if a company wants to avail the services of a payment gateway it has to shell approximately Rs 3 lakh before starting its operations. In India, only 300 out of roughly 3,00,000 websites process their transactions through payment gateways because most of the payment gateways lock the business for a specific period by way of a contract ensuring that the they continue to pay even though the business is not flourishing. The high costs, expensive recurring fees charged by financial institutions and entry barriers have restrained the brick and mortar players to use Internet for expanding their global presence.

Even though India has a strong e-commerce law the country's legal infrastructure may not be able to cope up with the projected growth. For instance, many Indian states are still unwilling to accept online trading as a part of IT-enabled services (a sector that enjoys exemptions from local taxes) and try to apply tax for physical trading.

The growth of the overall Internet user base and quality of Internet access like broadband and above all the security and legal infrastructure are the issues that if not addressed could stall the growth of e-commerce in the country. Many steps and ways have been taken by the online retailers to avoid these issues. Companies are innovating various products to meet the security concerns, which constitute a continuing problem for electronic merchants. Apart from this, portals will have to offer discounted prices, greater integration with content and instant product reviews and user experiences to lure more buyers as meeting

customer expectations online is a tougher task than doing it offline, since checking out another shop is just a click away for the user.

SECTION-H THE FUTURE OF E-COMMERCE

The joining of commerce and Internet technology has proven to be profitable for both businesses and consumers. The benefits brought on by e-commerce are likely to increase and become more beneficial to those who have taken the advantage of many offerings that net offers and has used it in their business effectively. There is no doubt that there is a future for e-commerce globally. E-commerce allows the customers to make a choice between competing products sitting at the same place thereby saving a considerable amount of time and effort and for merchants the transaction costs are greatly reduced because of the savings in respect to display and showroom costs. Today, Internet is touching the social fabric of communities where it is used from communication, information, and entertainment to e-commerce.

In India, e-commerce has just touched the tip of the iceberg and will grow exponentially in the next 3-5 years. It is believed that more and more people are joining the growing online community and it is estimated that three to four years down the line, India with approximately 30mn Internet users (Source Ac Nielsen), will have the most Internet users in Asia, next only to China. This growth would be assisted by a number of factors including dropping personal computers prices, low Internet access charges (or even free internet access) and Internet access through cable TV. As the life gets complex and fast moving with the increasing per capita income and spending power in the hands of the middle class and with less time to spare for shopping many of them are increasingly depending on the Internet to vent their spending urge. Though Indias online population constitute a small

proportion of its population but it represents a set of consumers that offer marketers a winning combination i.e. a greater affluence and the willingness to adopt the technology faster. They also have an additional attribute of the willingness to shop online. These changes are mainly poised by the changing lifestyles, shopping habits and multiple Internet access points used by the consumers. The user experience and the confidence that one builds in buying would be much more than in a simple dial-up connectivity which would propel e-commerce transactions in the coming years.

Although there has been a rise in the number of e-commerce transactions in India, there is still hesitancy in using e-commerce due to the security and encryption concerns attached to it. The day is still far off when online purchasing will become as common as offline, and when e-commerce players will become additional distribution channel and point of contact for marketers across brands and categories. The main barriers to online purchasing are ignorance and misconceptions but continuous steps are being taken to fight at this level. Today retailers are capitalizing on the growing trend of online sales by providing a more streamlined online shopping experience to its customers by offering discounts, free shipping, guaranteed on-time delivery, gifts with purchases, gift recommendations and broad product selection. These methods not only entice online purchasing, but also help consumers to research purchases and shop more efficiently offline. Many brands have started retail sales on their website because of direct consumer interaction, lower sales cost and higher margins. Some of the leading brands that have full-fledged online presence are Titan, Tanishq, Nike, Reebok, Samsung, LG, Motorola, Onida, Kodak, Nokia, Casio, Arrow, Lee, Wranglers, Allen Solly, Raymond, etc. Some of the market analysts believe

that it is difficult for smaller online companies in India to establish their presence across the country because the companies with a reputed and a leading brand name would hinder smaller sites to attract customers but more research into this segment has shown that the growth in e-commerce is also brought about by the small and medium enterprises (SMEs).

More traditional business companies are now using e-commerce to reach the global market. In India not many own a credit card and their fear to give out the credit card number, which is important while making transactions poise a threat to online shopping. Consumers generally use sites as a referral for buying products offline because still Indians prefer to touch and feel the product before making a purchase as a result purchases are presently restricted to only certain product categories like travel and books. But online shopping is bound to increase manifold in the near future especially in the business-to-business (B2B) segment because the touch factor and the cash element are not that crucial for the business related products and services. Smaller towns and cities are expected to become a large contributor to online shopping as the purchasing power of the consumers are increasing at a far higher rate and they find it easier to access latest and the unavailable products through the net. In metros, the need for convenience (owing to rapid change in lifestyles) clubbed with easier access to the Internet would help sustain the online shopping growth.

The e-economy has not only benefited the sellers and the buyers but has a lot of potential for other sectors too. Some of them are:

BANKS
The e-commerce is opening a huge new business for banks to work as payments gateways as banks play an important role in the online payment of both buyers and sellers. Banks have introduced better online payments to customers for example ICICI banks eCheques. Due to this trend it is believed that liability of fraud which lies with merchant today is likely to shift on to the banks in the coming years.

COURIER COMPANIES
Courier service is one of the major delivery mechanism used for most of the goods ordered over the Internet. Thus increase in online shopping offers a big opportunity for the courier businesses.

MOBILE COMPANIES
The revenue of mobile companies is also likely to increase with newer and exciting developments taking place in e-commerce. Today payment can be done through mobile phones for example e-ticketing is done through Wireless Access Point (WAP) enabled phones by accessing the portal or by simply sending an Short Message Service (SMS). In the future there will be a convergence of media, Internet, cable and satellite networks with mobile telephony. The ease of access to and use of these media will bring about an increase in the size of the market.

ADVERTISERS

Many advertisers are using e-commerce to target its customers as each site has its own kind of services and the visitors who visit these sites have a specific profile. With the help of advanced data collection tools advertisers are targeting these people in a big way. Thus online advertising is a blossoming industry.

EMPLOYMENT
E-commerce has opened new employment opportunities for a large number of people like programmers, business developers, content providers, web masters, marketing etc.

E-commerce is not likely to replace the physical stores soon, but it allows consumers and business to take advantage of a new experience. It is a fast growing industry and will be a force for economic growth in the new millennium. It is estimated that online shopping in India would touch a whooping Rs 1000 crore in 2007(source IAMAI). Internet business will continue to prosper and grow for many years in the future. Online retailing is expected to grow drastically and within e-commerce the areas expected to grow include travel, electronic goods, and white goods, financial services, entertainment and groceries. Travel would definitely drive the volumes as most airlines are shifting to online ticketing. Continuous steps should be taken to overcome the obstacles so that the market can reach its full potential. The driving future growth will be factors like sanctity and legal validity of transactions, client service focus, greater focus on the consumers real needs, reliable delivery infrastructure, building bonds of trust with customers, convenience of online product research and comparison, competitive pricing and an increasing level of PC

penetration and Internet awareness. Thus the rapid adoption of online shopping among the consumers is spurring both the local and foreign brick-and-mortar vendors to increasingly adopt business strategies around the Internet.

RESEARCH METHODOLOGY

The study was conducted using exploratory and explanatory research. Exploratory research helps to determine the best research design, data collection method and selection of subjects. In exploratory research secondary data study has been used to understand the topic but alone it was not possible to study the internet user that visited an e-commerce site, what triggered his/her purchase, the profile, aversions and proclivity, the shopping experience and in general the nuances of shopping online.

Following the exploratory research collection and analysis, some descriptive research methods were also used to understand the topic better. Descriptive research was used because it would help better understanding of the online shopping in India. The primary research technique that was used was the questionnaire method. The survey was administered throughout, as it was the main primary tool used which allowed to have a reliable set of data to interpret. The questionnaire method was chosen because it is more versatile, faster and cheaper method than other methods and can extract all the relevant information easily. Alternative to questionnaire administration methods such as phone, mail, and email were also used.

The first step was to understand the target population, sample frame, and sample size before the survey was designed. Since the study wanted to understand the online shopping in India the target population were the Internet users who frequently visited the ecommerce sites. The Internet users were taken because they would be able to give a clear picture as to understand clearly the online shopping in India. The research was targeted

across Delhi among all the people within any age group who uses Internet. Any person who met these criteria was a potential sample unit for the survey. Since it was unable to use a planned-upon sample frame, a non-probalistic sample was used. The survey was mainly done online by mailing across the questionnaire to the target population and also it was handed out randomly to the people who used Internet.

The sample size was the next step in the surveying process. A sample size of 200 was taken to serve the purpose of the research. The sample was equally divided among males and women within any age group to clearly understand their online shopping behavior. The surveys was mailed and distributed using a convenience sample. The convenience sample worked best for the research purpose because it allowed passing out the surveys in a relatively flexible way, so that even if a potential respondent refuses or has no time to fill out the survey there were many other units around the Delhi area who could replace the said person. Routine quality control procedures were followed so that there was no error.

The next step was the construction of the questionnaire to identify what factors determine whether Internet users choose to buy or not buy online, and how frequently they made such purchases. The questionnaire was designed clearly using multichotomous and dichotomous questions so that it was easier to analyze the data. The questionnaire solicited information on the users, profile, Internet usage, products/services purchased online along with future propensity to buy, their online shopping aversions and preferences and the factors that would increase their propensity and frequency of shopping online. The question transitions were made as smoothly as possible from one question to the next so that it flowed and was

therefore easier to work through. The survey made sure that it was simple and interesting. A brief introductory mail along with the questionnaire was also sent across to the respondents to make them clear the purpose of the research. The questionnaire was first pretested with 5 respondents who used Internet and according to their suggestion several minor changes in the wordings of the 18 questions were made. The questionnaire was subsequently mailed across and distributed among the respondents at different locations around Delhi. This allowed having a diverse group of respondents and a wide range of Internet users to analyze. After the completion of the survey it was entered into Microsoft Excel for analysis.

ANALYSIS & FINDINGS

The objectives of the research were studied with respect to a regular online shopper who shopped more than once because they would be the right respondent to give an insight about the online shopping. Therefore it is firstly important to understand who is a regular online shopper. In the survey the respondents where asked the following questions which helped to know about a regular shopper.

I Have you purchased anything online ever? FIGURE 1 TOTAL PURCHASE ONLINE

NO 35%

The
YES 65%

research that the

showed 65% of

Internet users had shopped online while 35% had not bought anything. This is mainly because of the changing lifestyle and taste patterns. As the life is getting more and more fast paced more people are moving on to shop online mainly because of convenience. This shows that a more Internet users are using it as a shopping medium and there is a huge potential in this sector but one should not be carried away by this figures. There could be a possibility that only a small section of the online shoppers are shopping or only a particular category of good had brought about this huge number. As a result the entire analysis was done in case of a regular online shopper to understand the shopping behavior of the online shoppers.

The following question helped to understand who is a regular online shopper among the 65% who had indulged into online shopping. II How frequently did you purchase online? FIGURE 2 FREQUENCY OF ONLINE PURCHASE
80% 70% 60% 50% 40% 30% 20% 10% 0% Only Once 2-4 times 5-6 times More than 6 times 12% 5% 9% 74%

This helped to understand the purchasing behavior of the online shoppers. It was seen that 14% of the online shoppers had shopped more than five times and 74% had shopped 2-4 times. The frequency shows the acceptance of Internet as a shopping medium. Though only a small amount of the online shoppers had purchased more than 6 times but still there is a huge opportunity in the Internet arena. The 65% of the online shoppers who had shopped more than once were considered as regular shopper and the entire analysis was based on these regular shoppers.

OBJECTIVE OF THE RESEARCH

OBJECTIVE 1

Studying the explosive growth of the Internet and the World Wide Web, combined with the rapid emergence of electronic commerce (e-commerce), has led to the growth of the online shopping. But still online shopping contributes a minor part of the online activities.

The Internet Usage- It is necessary to study the amount of time spend by the regular shoppers on the world wide web because this would give us clear picture as to understand whether usage and time spent by the regular online shoppers has an effect on online shopping or not. FIGURE 3 ONLINE SHOPPING &INTERNET USAGE BY YEARS
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than1year 13years 35years More than 5years 2% 6% 14%

78%

The diagram shows that shopping has increased with the usage of Internet over the years. Regular shoppers who have been using Internet for more than one year had shopped to 98% and regular shoppers who have been using Internet for more than five years have shopped to 78%. Internet is not a new concept for these regular online shoppers and they have been using it for more than 5 years now. The increased usage over the years has lead to an

increase in shopping, as these regular shoppers are able to make use of the various ecommerce activities. FIGURE 4 ONLINE SHOPPING &INTERNET USAGE BY HOURS A WEEK
40% 35% 30% 25% 20% 15% 10% 5% 0% 0-5 hours a week 6 - 10 hours a week 11 - 15 hours a week 16 - 20 hours a week More than 20 hours a week 4% 12% 20% 28% 36%

The research shows that 36% of the online shopping had been done who use Internet for more than 20 hours a week and 96% of the shopping has been done by regular shoppers who have been using Internet for more than 5 hours a week. As more the regular online shopper are using the Internet it is seen that they end up buying more also. This shows that Internet is becoming an integral part of the daily activity of the regular online shopper. The regular online shoppers who have been using Internet for more than 20 hours are more comfortable and confident as a result they purchase more online as compared to who use Internet for less number of hours. The study shows that the growing usage of Internet has lead to increase in online shopping as seen above. There is a positive relation between increase usage of Internet and online purchase. The marketers should capture this enormous growth, which can be brought by the penetration of broadband and lowering the prices of computers. Thus increase in usage of

Internet over the years and the more time spent has lead to an increase in shopping. But one needs to know whether online shopping is an integral part of regular shoppers or not this understood as follows.

The web online activity- the following classifications are done to study the online activities in case of a regular online shopper. FIGURE 5 ONLINE ACTIVITIES
10% 20% Finance Shopping

32% Communication

14% Entertainment

24% Inf ormation Gathering

The Internet offers four basic services communication (socializing service with peer group or core group (email) or with new groups of people (chat), information services, entertainment services and commerce services and shopping. The research shows 32% of the regular online shoppers use Internet for communication while only 10% uses it for shopping which shows that communication still forms the major activity among the regular online shoppers.

FIGURE 6 ONLINE ACTIVITIES BY AGE

70% 60% 50% 40% 30% 20% 10% 0%
communication Information gathering Finance Shopping

18-30 years 31-40 years 41-50 years above 50 years

This classification further provides an insight that Internet is mainly used as a means of communication in respect all the age groups of the regular online shoppers. It contributes to 60% of the major activity among the regular online shoppers who lie between the age group 18-30 years. It could be seen that shopping as a basic activity on the Internet contributes to the minimum. Internet as a medium of shopping is maximum used by regular online shoppers between the age group18-30 years, which is 18% while above 50 years it is used just to 2%. The increase in usage among the 18-30 years is basically due to high awareness. The marketers should focus mainly on the age group between 18-30, as they are the main drivers for growth. Thus the research shows that though the regular shoppers are using the Internet for quiet some time now but shopping still remains a small part of the major activity

FIGURE 7 ONLINE ACTIVITIES BY TIME

90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
0-5 hours 6-10 hours 11-15 hours 16-20 hours more than 20 hours

Communication Information Entertainment Finance Shopping

It is evident that regular online shoppers also spend a major part of their time in communication unlike the occasional online buyers. In 0-5 hours a week they spend 77% of their time in communication, which includes email, and chat as the major activity with shopping which does not seem to exist at all. Information search constitute 20% of the time. The information search increases as the regular online shoppers tries to figure out ways to surf the Internet and access the information they require. It is true that more regular online shoppers use Internet shopping sites to gather information about products rather than to make a direct purchase.

But it is to be noticed that as the time spend increases communication falls and other activity picks up like entertainment and finance. One could see from the graph that between 16-20 hours a week communication falls further but information search also falls as the regular online shoppers becomes more focused in their information search rather than

wandering aimlessly in the Internet space. They continuously use search engines for routine information needs. The time spent on entertainment increases marginally to 18%. As the people spend more time it has been seen that activities like shopping and finance related needs increases. The regular online shoppers who use the Internet for more than 20 hours a week has shown that they have indulged into more shopping i.e.10%. It is true that as the regular online shoppers spends more time on the Internet there is a possibility that they would end up buying more as they are ease with the use of internet. Increased usage of Internet is positively related to the buying behavior on the Internet.

ANALYSIS- It is true that increase in internet has lead to an increase in the online shopping as 78% of the online shopping has been done by the regular online shopper who have been using internet for more than five years and 36% of the online shopping have been done among the regular shopper who uses the Internet for more than 20 hours a week. Thus increase in usage of Internet has lead to an increase in online shopping. But shopping still constitute a small amount of the major activity on the internet as 32% of the regular online shoppers uses Internet for communication while only 10% uses it for shopping. Communication still constitutes the major activity on the Internet.

OBJECTIVE 2
Online behavior is affected by demographics i.e. by gender, education and income. Hypothesis 1. More male Internet users are frequent online buyers than female Internet users. 2. Regular online buyers are better educated than occasional online buyers. 3. Income is higher in case of a regular online shopper than occasional online buyer. FIGURE 8 ONLINE SHOPPING & GENDER

28% Female

72% Male

Among the 65% of the online shopping, males (72%)had purchased more as compared to women (28%). This shows that it is true that more males are shopping online as compared to women. This is mainly because women still like to feel, see and touch the product before buying. It was noticed that some of them felt shopping as a reason to go out with the family and spend time together, which was not possible in case of online shopping. As more and more Indian women are flocking to Internet there is a possibility that they might end up in a purchase. Also an increase in the spending power in the hands of the women might lead to an increase in the online shopping. The research showed that 28% of the women who

shopped online fall mostly in the service and executive class with an income above Rs10,000. The marketers should make sure that they produce the item keeping in mind the needs of the women population as they still continue to be an important decision maker when shopping for the family.

FIGURE 9 ONLINE SHOPPING & EDUCATIONAL QUALIFICATION

3% Non Matriculate

8% Matriculate

54% Postgraduate

35% Graduate

Educational difference is a significant demographic variable, which shows that regular shoppers who were better educated made more purchases online. 89% of the shopping has been done by the regular shopper whose is educated with a graduate or postgraduate degree. This shows that frequency of purchase is more in case of a higher educated regular shopper as compared to a online shopping done by a regular online shopper with matriculate (8%) and non matriculate (3%).

FIGURE 10 ONLINE SHOPPING & INCOME

40 35 30 25 20 15 10 5 0 Student Service/Executive Business Others less5000 5000-10000 10000-25000

38

21 14 8 1 3 5 2 1 1 5 1 1 3 15 11

above25000

Income and buying behavior are positively related. It was seen that a regular online shopper with a higher income had purchased more online as compared to lower income online shopper. This trend was seen in all segment of the population. It is true that more the income in the hands of the population they would indulge in shopping. The service class had done the major purchase in all the various levels of income. It can be seen that hardly any purchase is done among the regular online shopper whose income lies below Rs5000.

ANALYSIS-Thus three hypotheses stated were true incase of the regular online shopper and it can interpreted that online shopping is effected by demographics like gender, education and income levels. Among the 65% of the online shopping, males (72%)had purchased as compared to women (28%). There is a positive relation between education and income of the online shoppers. 89% of the online shopping

was done among the regular shoppers who were educated with a graduate or postgraduate degree compared to 11% shopping who were matriculate and nonmatriculate. A 60% of the shopping was done by the regular shopper who had income more than Rs 25,000 than 40% who had income less than Rs.25,000.

OBJECTIVE 3

To identify the factors which Internet users choose to buy or not buy online and how frequently they make such purchases. Analyzing the importance of satisfaction level in the online purchasing environment. Hypothesis Consumers who make frequent online purchases are higher in convenience orientation than those who purchase occasionally. FIGURE 11 ONLINE SHOPPING & MOTIVATING FACTORS

7% Product Comparison 32% Convenience

26% Saves Time

12% Superior selection 23% Price

It is believed that consumers whether online shoppers or non-online shoppers value price to convenience but the study contrast this popular belief. The study showed that 32% of the shopping had been done by the regular shopper who think convenience is the main driving force while 23% of the shopping had been done for whom price was the main orientation for shopping online. Other motivating forces, which had lead to online shopping, were saves time (26%), product availability and superior selection (12%), and product

comparison (7%). Convenience here is characterized as ease of purchase, home delivery and ability to shop 24x7. These factors motivate the regular online shopper to buy over the Internet and regular online shoppers who value convenience are more likely to buy on the web, as compared to occasional online shoppers. Every connection is a potential for net shopping. Therefore the companies should attract and retain its regular online shoppers, as the Internet is a tangled jungle of web sites, which is possible at a click of a mouse. They should design strategies and develop products keeping in mind the convenience factors.

FIGURE 12 BARRIERS TO SHOPPING ONLINE

7% 9% Unfamiliar Others

33% Privacy & Security

14% Hassle of returning

16% Lack of Customer Service 21% Inability to touch & feel

The main areas for concern in respect of the regular online shoppers while shopping were privacy and security (33%). Most of them still preferred the conventional method of shopping like the touch and the feel factor (21%). They felt that it is possible to see, feel, touch and try the products before buying in a shopping store as compared to Internet shopping. Other reasons that concern the regular online shoppers were inability to reach the customer service (16%), hassle of returning the product (14%), technical foul ups, hesitant

in purchasing from an unfamiliar source and person and delivery costs. The marketers should formulate such strategies so that the privacy and security concern can be taken care off.

FIGURE 13 CONVENIENCE- THE MOTIVATING FACTOR

80% 70% 60% 50% 40% 30% 20% 10% 0% 12% 5% Only once 2-4 times 20% 5% More than 5 times 9% More than 6 times 27% 48% 74%

purchase convenience

It has been seen that there is a positive correlation between the frequency of purchase and the convenience factor for buying in the Internet arena. The regular online shopper who had purchased more than 6 times (9%) for them convenience is the most important motivating factor (48%)for shopping on the Internet. Convenience has been characterized as ease of purchase, home delivery and ability to shop 24x7. The online shopper believes that large amount of information about the product and the ability to compare prices is available at a click of a mouse thus making the entire shopping experience very convenient. Thus the marketers to should keep the convenience factor in mind while providing the goods and services.

Satisfaction Index It is important to understand the satisfaction level among the regular online shoppers, which had lead to online shopping. This could be understood by the satisfaction index and the frequency of purchase among the shoppers.

FIGURE 14 SATISFACTION INDEX

2% Highly Satisfied

12% Dissatisfied

31% Neither Satified nor Dissatisfied

55% Satisfied

A 55% of the regular online shoppers were satisfied with 12% dissatisfied. An important thing to be noted is that only 2% of the regular online shoppers were highly satisfied while 31% of the regular online shoppers were neither satisfied nor dissatisfied. This shows satisfaction level plays an important role in online shopping with more regular shoppers falling under the category of satisfied. This shows that they were overall satisfied by the experience of shopping online. But the companies should take measures so that the dissatisfied and the neither satisfied nor dissatisfied category of regular online shoppers could be moved to satisfied or highly satisfied. A note should be taken that only 2% of the

regular online shoppers are highly satisfied which shows that there are still concerns, which poise the regular shoppers from using the Internet frequently as a shopping medium. Satisfaction level can also be measured by the frequency with which the online shoppers purchase online. According to human psychology it is true that frequency of purchase depends upon the satisfaction level received. According to the figure 2 (already explained), a 74% of the regular online shopper has purchased 2-4 times and 9% had purchased more than 6 times indicating that an increase in the confidence level and accepting the Internet as a shopping medium. The increase in the frequency of shopping was mainly because they were overall satisfied by the entire shopping experience.

Analysis: It is seen that the main orientation for buying among the regular online shoppers were convenience (32%), saves time (26%), price (23%), product availability and superior selection (12%), and product comparison (7%). The hypothesis stated that convenience is major factor motivating the regular shopper was true as 75% of the regular online shoppers who have shopped more than 5 times felt it was necessary as compared to 25% who shopped less than 5 times.

The barriers to online shopping as stated by the regular online shopper were privacy and security (33%), inability to touch and feel the product (21%), customer service problems (16%), hassle of returning the product (14%), purchasing from unfamiliar source and person (9%) and other problems (7%).

Satisfaction level plays an important role in online shopping, as 55% of the regular online shoppers that are satisfied tend to purchase more. It can also be seen that 74% have shopped more 2-4 times and 11% had shopped more than 5 times showing that satisfaction level plays an important role in online shopping.

OBJECTIVE 4
Future and growth of Online Shopping

This can be understood by the categories of good bought by the regular online shoppers presently and the future of the various categories. FIGURE 15 PRESENT AND FUTURE CATEGORIES OF GOODS

120% 100% 80% 60% 40% 20% 0%

Books Railway tickets Airline tickets Electronic Gadgets Gifts Movies tickets

Present

Future

It is seen that railway tickets 70% and airline tickets 93% are the most popular categories among the online shoppers followed by books and electronic gadgets. This is the main category, which is bringing about online shopping culture among the regular online shoppers. The companies should bring out innovative ways so that there is a growth in other categories of goods also. The entire shopping culture among the regular shoppers is brought mainly by the travel categories followed by electronic gadgets. The graph shows that online shopping is tend to grow in the coming years as consumers want to buy more in the future.

TABLE 1 FUTURE CATEGORIES OF GOOD Railway tickets Airline tickets Electronic Gadgets Books Gifts Movies tickets Jewellery Computer Software Hotel Rooms/Car Rental Event Tickets Toys Infant / Child items Food / Groceries Accessories apparel CD/Videos Magazines Home tools and products Sporting goods 83% 80% 50% 43% 33% 30% 23% 20% 20% 13% 13% 10% 7% 3% 3% 3% 3% 3%

The table I shows that shows that there is a future growth in the electronic gadget and book categories also apart from railway and airline tickets, which continues to be on the priority list. There is a growth in these categories because traditionally products like audio-video, apparel, and computer accessories were purchased through catalogs and other forms of direct mail but toady online shopping serves a convenient means of distribution channel. Another reason for the growth in these categories is because of well-established sites for travel, audio-video (e.g., CD-Now), and computers (e.g.www.del.com), which lure the

consumers to buy these products. These goods do well because consumers are not bothered much about the touch and feel factors, which generally drive the shopping in India unlike categories like apparels and groceries where it still remain an important factor while purchasing. It is difficult to change the set mindset of consumers for certain categories of goods but still companies should keep innovating and find means and ways to attract more online shopping. Analysis: There is a future growth in online shopping which can be especially seen in the travel arena with railway 83% and airlines 80%, electronic gadgets (50%)and books (43%). Gifts also seem to show a growth in the coming years. Thus the marketers should mainly focus on these growing categories of goods, which would drive the online shopping in the future.

SUMMARY
The findings show that Internet usage has increased over the years and it is leading to an increase in online shopping. Communication still forms the major activity among the large

number of online shoppers as 32% of regular online shopper use Internet for communication as compared to shopping (10%).

Online shopping is affected by demographics as it has been seen that more males are shopping online as compared women online shoppers and there is a positive relation between education and income levels with respect to the increased online shopping behaviour.

The most important motivating factor, which influenced the online shopping, was convenience followed by time saving and price. Regular online shoppers considered convenience as the main motivating factor while buying and were less price sensitive. But the online marketers should attempt to differentiate their products or services making the comparison easier. The marketers should bring out innovative ways so that the consumers can do more online shopping while taking the full advantage of rich information, easy access and convenience of the Internet.

One of the main concerns among the online shoppers was privacy and security. Another reason that hindered online shopping was the touch factor. Consumers still preferred the experience they get from traditional stores like feeling the stores atmosphere, interacting with a salesperson, and seeking sensory stimulation. This might hinder the use of certain goods like grocery and apparel, as the touch factor is the main factor, which drives the shopping for these goods. The future of online shopping is bright especially in the categories of travel, books, electronic gadgets and gifts.

CONCLUSION

The e-commerce is one of the biggest things that have taken the business by a storm. It is creating an entire new economy, which has a huge potential and is fundamentally changing

the way businesses are done. It is believed that electronic commerce will become a huge industry in the coming years and online shopping is now becoming a significant part of the consumers daily life to meet their never ending requirements in a convenient way.

Though the Internet base in India is low, it is growing at a fast pace as it can be seen that eBay India has two million users across 240 cities in India (source eBay) and the most popular items sold on the site are jewellery, mobile phones and digital cameras which shows that online shopping is happening in India. Online shopping is picking up and is becoming a trend. More consumers are indulging into Internet shopping as seen by the research because of the value proposition it offers to a customer such as convenience, 24x7 shopping, doorstop delivery, a broad product selection and the ever-expanding range of unique and unusual gift ideas as well as increased consumer confidence in shopping on the internet is increasing. The main motivating factor seen during the research was the convenience and customer service which drives the people to online shopping as a result today they are buying airline and railway tickets, books, home appliances, electronic gadgets, movie tickets, etc by logging on to a web site, than driving up to a store .As the research suggest that increase in usage of internet increases the online shopping so there is a need to increase in broadband penetration as it accelerates the growth of online trade. A huge buyers and sellers across demographics are shopping online because of the changing lifestyles and shopping habits but the majority of the users are males. It was seen that despite the immense possibilities available on the Internet it is mainly used for mailing, chatting and surfing. E-mail applications still constitute the bulk of net traffic in the country.

The main reasons for people for not shopping online are security and privacy concern. The research shows that online shoppers have reservations about giving away the credit card number to a stranger as they feel there is no face, no person. Other concerns were the reluctance to shop across borders, missing of the touch factor, shipping charges, the difficulty of judging the quality of merchandise and the hassle of returning unwanted items. Since most online merchants cannot make that guarantee or are not communicating their ability to assure security, a broad array of individuals are not adopting this innovation yet. Online shoppers wanted that if they are interacting with the merchant the entire process should be secure and private. Online shopping must continue to expand its services. Consumers are not looking for a shopping experience that duplicates the frustrating experience of shopping in the physical world, but instead they are looking for innovative process that removes the obstacles to online shopping. Consumers and merchants both desire a safe, simple and comprehensive online shopping experience and this depends upon the penetration of the Internet.

The research shows that within e-commerce, it is the high-end ticket items that would grow faster. Travel forms the biggest chunk of e-commerce in India followed by books, electronic gadgets and gifts. Some categories of products have not increased like fashionable goods because it is perceived to be more risky. The decision in this category of products are more significant because of the increased importance of touch and feel, color and cost, and the increased emotional element associated with more fashionable items which is often purchased for special events.

Online shopping is here to stay as more and more people are indulging into it as the Internet provides them the exposure and access to unique or unusual products that are difficult to find locally. Today's users are logging on to the Internet at an earlier age than the earlier generation did and consequently maturing to online shopping in a quicker way. There is no doubt, that online shopping is a market that will grow at a scorching pace.

RECOMMENDATIONS

Online shopping in India is poised for greater acceleration as PC and Internet penetration grows. It is becoming one of the top Internet activities and there is a huge growth in this business as more manufacturers and providers are integrating the Internet into their sales

model. But there are many things that need to occur in online shopping to generate higher revenues and the key to it lies in the hands of the marketers. To make online shopping a boom following methods can be followed.

India has a strong research and development (R&D) capability so companies should innovate rapidly to take care of the security issues. Technology like text to speech softwares should be innovated to take care of the security concern.

In India the total ownership of credit cards is small as compared to its population and there are also hesitant in using it as a mode of online payment therefore alternative methods of payment like cash on delivery (COD) where the end user pays cash after the product is delivered and debit cards where the bank accounts are directly debited should be used. Other technologies like encryption technologies trusted third-party certifications; digital ID systems and prepaid cards should be used.

The consumers should be made aware that one of the safety aspect of using credit cards online is that in case of disputed credit card payments for online transactions the onus is on the merchants to prove that the transaction actually took place, as online users don't physically sign a credit slip. As a result online users are protected from fraudulent use of credit cards.

 There is a growth in the cellular phone market in India, more merchants should make use of this device allowing the customers to access the Internet and use it as mode of payment thereby obviating the need for PCs and credit cards.

It is not only important to pay strong attention to the security issue and create new, innovative safeguards that protect consumers but the merchants should promote these safeguards to the marketplace and make the prospective consumers aware that the communications, personal data, credit card accounts, and transaction information can be protected.

One of the factors that hinder Internet penetration in India is access. More companies should adopt click and mortar model with the real world operations to complement its online presence for e.g. customers can walk to the office to access its services.

Merchants should provide goods and services that offer the right value for money. There should be transparency in policies (returns, privacy, shipping, etc), insurance against fraud and a good after sales services should be provided to consumers making it an enjoyable experience.

 Cyber crime is increasing with hacking, software piracy and credit card frauds therefore companies should have an IT security policy to protect their information assets and employees should be made aware of the same.

Consumers today demand a better, more efficient and less cumbersome way to compare and buy products online. Innovative service should be provided to consumers so that they can compare products, which are available online using their mobile phones.

Online shopping today is an incomplete, fragmented, and sometimes frustrating process. Therefore merchants should set themselves apart from their competitors by factors other than price, constantly innovate and move towards creating customer confidence to trade online. They should provide massive selection at lower prices, offer a personalized customer experience and their web sites should deliver a shopping experience that addresses all of the consumer needs like recommendation about the products, feedback from other customers, etc.

Vendors should educate the customers about e-commerce like educating them on safety tips like reading the item description, looking for a sellers feedback score and asking questions, detecting spoof mails and informing them about the new online crimes which happen regularly.

 In India still the penetration of Internet has not happened the way it should have been which hampers online shopping. Ecommerce revolution can be brought about by providing more broadband connections at affordable prices.

There is a huge market for business in the rural India therefore efforts should be such that to bring these people also into experiencing online shopping. Companies should create more Indian language software or content as Internet still is a primarily English language world and language could be a barrier in rural India. Only few language portals like webduniya.com exist today.

Most of the Indians still like to see the product before buying; efforts should be made to change this mindset of the people by making them aware of the benefits of online shopping.

To make online shopping big the shopping web sites should give the customers the convenience to shop anything on a single site like ordering pizzas, movie tickets, groceries, etc rather than in scattered places. The site should not only provide information content but also tools to navigate and evaluate this information. The information on the site should be just sufficient for the consumers to make a decision and not to overload them with information, which results in confusion.

 Convenience and time saving are the main reason to shop online. Therefore Business to Consumers (B2C) sites should be designed in such a way that consumers spend less time in finding information they are looking for as delays in searching or loading a web page might turn the consumers to other sites which have faster download and display times.

Since consumers control the experience they receive from shopping over the Internet, there is a need to find ways of managing the amount of information available over the Internet. Sites that are able to offer this information and present it in a simple way to understand will become the preferred destination for online shopping.

The key to selling to a customer which cannot be seen is to get the customer to trust the website with which they have electronic transactions.

Active participation from consumer marketing companies to manufacturing industries is required to make online shopping a booming sector.

Some of the things, which the consumers should take into considerations while online shopping, are: Use a secure browser. The browser should comply with industry security standards, such as Secure Sockets Layer (SSL).

Consumers should shop with the known companies, as it is easy to set up a shop online under any name. If they are not familiar with a merchant they should ask for paper catalogue or brochure to get a better idea about the merchandise and services and should find about the companys refund and return policies. Consumers should also search for the reviews of the company.

Read the privacy policy on the site of the companies before shopping as this helps to know what information is being collected and how it would be used.

Keep a print record of the transactions this would come handy in case of any fraud.

One should find out how the company secures the financial and personal information before paying the bills.

The personal information should be kept private like address, telephone numbers, email, etc. One should avoid using telephone numbers or date of birth for

establishing a password instead should use a combination of numbers, letters and symbols.

Proper research should be done about countries shopping laws and merchant when shopping from other countries.

LIMITATION

Every study will have its problems and limitations at some point during the project. This study is no different. The use of a non-probalistic sample in the research was a major limitation because there was no way to make sure that the sample taken represented the total population of the Internet users. A non-probability sample lacks the accuracy and precision that a probability sample might offer. Though this samples provided a better insight about the online shoppers but there could be a possibility that a respondent may have done online shopping but is not a regular Internet user. It was seen that some respondents were biased towards some questions. Another major limitation encountered doing the research assignment was the issue regarding the time.

BIBLOGRAPHY

 Donthu, Naveen and Adriana Garcia (1999), The Internet Shopper, Journal of Advertising Research, V39 (3), 52-58. Jasmine Kaur, Women Online, Dataquest, November2005 Krishna Kumar, The Return of the Net, PcQuest, November 2004. Lillian Clark and Peter Wright, A review of Common Approaches to understanding Online Consumer Behaviour Ravi Menon, The Network, Dataquest September, 2005 Shopping Around the web, The Economist, (2000) Tonita Perea Monsuwe, Benedict G.C.Dellaut and KodeRuyter, What Drives Consumers to shop Online? A literature review Yakesh Arora, Shopping Online, PcQuest January 2000.

Hypertext References: www.acnielsen.co.in www.iamai.in www.dqindia.com www.infotech.indiatimes.com www.pcquest.com www.economist.com

ANNEXURE

QUESTIONNAIRE Kindly highlight/bold your answers. 1. Do you use Internet? Yes No

2. How long have you been using Internet? Less than 1 year 1 3 years 3 5 years More than 5 years

3. On the average, how much time (per week) do you spend in surfing the Web? 0 5 hours 6 10 hours 11 15 hours 4. Have you purchased anything online ever? Yes No 16 20 hours More than 20 hours

5. Which category (ies) of goods have you bought through Internet? Books Electronic Gadgets CD/Videos Accessories apparel Gifts Event Tickets Hotel Rooms/Car Rental Railway tickets Airline tickets Computer Hardware Computer Software Magazines Movies tickets Office Supplies

Jewellery Infant / Child items Sporting goods Any other, specify 6. When did u shop for the first time? Last 6 months 6 months- 1year 1-3 year 3-5 year More than 5 year 7. How frequently did you purchase online? Only once 2-4 times More than 5 times More than 6 times

Food / Groceries Home tools and products Health and fitness products Toys

8. Overall, were you satisfied with your experience of online shopping? Highly Satisfied Satisfied Neither satisfied nor dissatisfied Dissatisfied 9. Where do you most often access the Internet?

Home Office / College

Cyber-cafes Any other, specify

10. What are the activities that you use Internet for? (Kindly rank them between 1 to 5,with 1=most used, 2=used to a large extent, 3=used to a good extent, 4=used sometimes, 5=rarely used) Communication (E-mail, Instant Messaging, Bulletin Boards, News Groups, Chat, etc.) Information Gathering (Research, News, Sports scores, Search for employment, etc.) Entertainment (Games, Adult entertainment, Entertainment sites, Sports, Music, Web page design, etc.) Finance (Investment portfolio, financial research, online banking, check stock/fund quotes, trading, etc.) Shopping (Researching purchases, purchasing, auctions, Selling, Classifieds, etc.)

11. Which category (ies) of goods are you planning to buy through internet in the near future? Books Electronic Gadgets CD/Videos Railway tickets Airline tickets Computer Hardware

Accessories apparel Gifts Event Tickets Movies tickets Hotel Rooms/Car Rental Jewellery Apparel gift certificates Infant / Child items Sporting goods Any other, specify

Computer Software Magazines Beauty products Health and fitness products Office Supplies Food / Groceries Pharmaceuticals Home tools and products Home appliances Toys

12. What is your main motivation for buying through Internet? Convenience (ease of purchase, home delivery, ability to shop 24x7) Price Saves time Superior selection/Availability Product comparison Any other, specify 13. What, according to you, are the most important barriers to purchase online? I am worried about giving out my credit card number I dont have a credit card I dont like providing personal information

I dont want to purchase from someone with whom I am not familiar I enjoy going out to do my shopping I like to see/touch the product in person, before I buy it Internet is too slow / Pages take too long to load I am worried about the cost/hassle of returning the product Delivery costs are too high Prices are too high Technical foul-ups prevent transactions from going through I cant find anything that I want to purchase on the Internet I dont know how but I am uncomfortable about purchasing through Internet The process is expensive due to cost of access Any other, specify

PERSONAL DETAILS 14. Age: Below 18 yrs 18 - 30 yrs 31 - 40 yrs 41 50 yrs Above 50 yrs

15. Educational Background Non-Matriculate Matriculate Graduate Postgraduate 16. Occupation: Business/Self Employed Service/Executive Student Any other, specify 17. Sex: Male Female 18. Average monthly income: Less than Rs. 5,000 Rs. 5,000 Rs. 10,000 Rs. 10,000 Rs. 25,000 Rs. 25,000 Rs. 50,000

Above Rs. 50,000 Name: _____________________________ City: ______________________________