CONSUMER BEHAVIOR TOWARDS

ONLINE SHOPPING

Project Report Submitted to Dr. B.R. Ambedkar University for

BBA 6th Semester Viva Voice

H.O.D Submitted By
Mr. Jitin Sahagal Disha Chaplawat Jain
BBA 6th Semester
Roll No.- 1803925071043
 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and

deep regards to my guide (Mr. Jitin Sahgal Sir) for his
exemplary guidance, monitoring and constant
encouragement throughout the course of this thesis. The
blessing, help and guidance given by him time to time shall
carry me a long way in the journey of life on which I am
about to embark.

I am dearly obliged for giving me an opportunity to work on

this project which has provided valuable information about
Consumer Behavior Towards Online Shopping.

THANKYOU.
 CONTENT
 INTRODUCTION
 BRIEF HISTORY
 WHAT CAN BE PURCHASED
 CONSUMER BEHAVIOR IN INDIA
 FACTORS INFLUENCING CONSUMER ONLINE TRUST
 CHALLENGES BY INDIAN CONSUMER
 TIPS FOR ONLINE SHOPPING SAFETY
 CONCLUSION
 BIBLOGRAPHY
 Introduction

In Today’s world of Information and technology, Internet has been proved most powerful
information media for sharing our thoughts and knowing very easily about world. There is a big
influence of technique on our daily life. Electronic devices, multimedia and computers are
things we have to deal with everyday. Especially the Internet is becoming more and more
important for nearly everybody as it is one of the newest and most forward-looking media and
surely “the” medium of the future.
“Shopping in simple sense is a retailer or shop is a business that presents a selection of
goods or services and offers to sell them to customers for money or other goods. Shopping is an
activity in which a customer browses the available goods or services presented by one or more
retailers with the intent to purchase a suitable selection of them. In some contexts it may be
considered a leisure activity as well as an economic
one.”(http://en.wikipedia.org/wiki/Shopping) The process of browsing or purchasing items in
exchange for money.( http:// www. businessdictionary.com/definition/shopping.html)

“Online shopping is the process of buying goods and services from merchants over the
Internet. Since the emergence of the World Wide Web, merchants have sought to sell their
products to people who spend time online. Shoppers can visit web stores from the comfort of
their homes and shop as they sit in front of the computer. Consumers can buy a huge variety of
items from online stores, and just about anything can be purchased from companies that provide
their products online. Books, clothing, household appliances, toys, hardware, software, and
health insurance are just some of the hundreds of products consumers can buy from an online
store.” .(http://www.wisegeek.org/what-is-online-shopping.htm)
 While be discuses online shopping it is commonly understood that this is the media
through which goods or assistance material are purchased online using internet devices. Online
shopping has grown in popularity over the years throughout the world. People find it convenient
and easy to bargain shop from the comfort of their home or office or any accessing point. This
is an act of purchasing products or services over the Internet. Main enticing factor of online
shopping is its alleviation the need to wait in long lines or search from store to store for a
particular item.

People purchases goods of their need from different places. It may be a fun for wealthy
people while for most of the buyers it a media to fulfill their needs or requirements for their life.
Everywhere in the world paying and taking goods is the most common feature for all classes.

Brief History of Online Shopping

This concept was first demonstrated before the World Wide Web (www) was
in use with real time transaction processed from a domestic television. The
technology used was called Videotext and was first demonstrated in 1979 by M.
Aldrick who designed and installed systems in the United Kingdom. By 1990 T.
Berners-Lee created the first WWW server and browser and by 1995 Amazon
expanded its online shopping experiences (Parker-Hall, 2009). (International
Journal of Humanities and Social Science Vol. 2 No. 4 [Special Issue – February
2012])
“Online shopping became popular during the Internet boom in 1999-2000.
Amazon.com, the online bookstore founded by Jeff Bezos, created history by
becoming the first bookstore with a presence only on the Internet. Following the
success of Amazon, many bookstores with a physical presence also created an
online presence on the Internet. Later, portals such as Yahoo.com and MSN.com
also started online shopping channels where people could buy more than just books.
Closer home, portals such as Indiatimes.com and Rediff.com came up with similar
options for the Indian
consumer.”(http://articles.economictimes.indiatimes.com/2006-12-
25/news/27439230_1_online.shopping.online.presence.online. purchase)

One of the first known Web purchases took place in 1994. It was a pepperoni
pizza with mushrooms and extra cheese from Pizza Hut, a somewhat appropriate
purchase for the early days of the Internet. Practically wide sense Amazon.com
opened for business on July 16, 1995.
(http://content.time.com/time/business/article/0, 8599, 2004089, 00.html)

What can be purchased through Online Shopping

Main feature behind the online shopping is the terms B2B and B2C are short forms for
Business-to-Business (B2B) and Business-to-Consumer (B2C). Both describe the nature and
selling process of goods and services. While B2B products and services are sold from one
company to another, B2C products are sold from a company to the end user. The main
difference between B2B and B2C is who the buyer of a product or service is. The purchasing
process is different in both cases and the following is a list of key differences between them.
Any B2C product or service could also be a B2B product, very few B2B products or
services will be used by consumers. For example, toilet paper, a typical B2C product, can be
seen as a B2B product if it is bought in larger quantities by a hotel for their restrooms and
guestrooms. However, few people will buy an excavator for their private use. Most B2B
products are purchased by companies to be used in their own manufacturing, producing goods
and services to be sold on. The value added product can then be either sold to yet another
company; or to the consumer. Any consumer product would have gone through numerous value
add processes before it is being purchased by the final user. Numerous suppliers from various
industries would have contributed to the finished product. For instance, a can of soft drink will
require different companies to provide the can, water, sugar, other ingredients, label-printing,
packaging, transportation and paint for the printing. The can itself is made from aluminum that
needs to be processed and extracted. Only the very last transaction in the sales/ purchase chain
is a true B2C relationship.( http://en.wikipedia.org/wiki/Business-to-business)
People can purchase almost anything online, starting with groceries and greeting cards to cell
phones and ring tones for the cell phones, everything can be purchased online. While most
people still find it convenient to buy their groceries from the neighborhood shop, many people
are purchasing rail, air tickets, theater ticket, bust ticket and valuable aids over the Internet. In
addition, people and corporate as well, are also purchasing a variety of services online, such as a
broking service or job search service. Even servant may be booked through internet.
 Use of internet has revolutionized the way of shopping because people have numerous
advantages and benefits of online shopping. Day by day percentage of online customers is
increasing as they are finding it comfortable than conventional shopping. There are many
reasons why people think buying good and commodities on the internet. Some of them may be
seen as under-

 Convenience:-
Convenience is the most important factor for every act of a person. In conventional
shopping people have to roam here and there for their selection of material. Sometimes
people have to face waiting and long line until shop assistant is ready to help a buyer.
Going market and purchasing a material proves very tiery and tedious with much kind of
pollution i.e. sound pollution, crowd pollution, air pollution etc.

In online shopping one can avail privilege of shopping round the clock. Even in midnight
one can explore for his desired material and that is also without delay and waiting. There
is no better place to buy information of products like e-books. This information’s are very
useful to choose and evaluate a product before purchasing.
Travel is the most popular category for online purchases. Not surprisingly, the maximum
number of online transactions in India is made at irctc.co.in, the site of the Indian
Railways, where train tickets as well as air tickets can be purchased online.

People can go to the airline's website and book their ticket or go to the online equivalent
of a travel agent, travel sites like Makemytrip.com and travel.indiatimes.com that offer a
choice of multiple airlines and the best deals in each. Overseas, Expedia.com is one of the
most popular travel sites, where one can book your travel and hotel stay. Expedia.com
has tie-ups with a large number of hotel chains and because of the large number of
customers who come to the site for their bookings, Expedia.com is able to offer very
good discounts. This type of facilities is not possible in conventional shopping. One must
have to move to the travel agent or window for booking ticket or a room in hotel.

 Decision of Price and Price Comparison :-

In conventional shopping method deciding price prove a difficult task. People find them
confusing after hearing so many differences in price of same good in different shops.
While in online shopping discloser of price is the most fascinating factor it has proven
media of cheap and better prices because product comes to a buyer from manufacturer or
seller without middlemen involved. Many online shops offer discount coupons and
rebates. Apart from this online store is only required to collect sales tax if they have a
physical location in a state even after people buy from a store across the world. In
conventional shopping tax may vary and price decided by a retailer also differs. Online
shops make comparison and research of various products and their prices possible.
Online store also provides people ability to share information and reviews with other
shoppers and friends. In traditional shopping purchaser has no such choice he/she has to
select the material available at retailer. If one is intended to compare prices than he/she
 has to move so many shops than only this thing may be possible with lot of expense of
time. In addition, online shopping consumer is relaxed and satisfied that same product is
available at same price for all consumers so there is no need of doubt and confusion on
prices which play vital role in online shopping.

 Variety :-
Selection of variety of material is also remarkable feature of online shopping. One can
get several brands and product from different seller at one place. Latest international
trends without spending money of airfare are easily available in online store. If a person
shop online, he or she can shop from retailer in other parts of the country or even the
world without being limited by geographic area. These online stores offer a far greater
selection of colors and size than you will find locally. Simply it can be said that Shelf
space in a brick and mortar store is limited, which means that your variety of goods is
limited. Not so with an online store. Plus, if a person doesn’t see what he wants in one
store online, he can simply move on to the next one. Purchaser has the power to do that
but in conventional leaving a store put people in uncomfortable condition.

 Sent Gifts :-
Sending a gift to a friend or family or relatives is very easy process in online shopping,
no matter where ever they stay. One can be very free from making excuse for not sending
a gift on occasions like birthday, wedding anniversary, marriage or any special day due to
distance.

 Less Expense :-
In conventional shopping people tend to spend a lot more than required shopping
expenses on various items while in online shopping picketing a particular selected item is
possible without any problem and hesitation as here no body shop assistant is going to
ask what more you want or anything else sir.

In India also some big cities provides this type of facilities for public.It has the world's
third-largest Internet user-base with over 137 million as of June 2012.It has made life so easy
going that if anybody has needed information about anything in the world if not hundred
percent up to a good extent one can find it over internet. People have acquired the habit of
'Goggling' it on the web; within a few seconds the screen displays the desired information.
Many of us cannot imagine life without the social networking sites. The Internet has indeed
made the world a small place and living life easier. And the rapid progress of technology has
made it possible to access the Internet from anywhere through plenty of means. It has such a
plethora of uses that we use it for one purpose or the other daily. It is even changing the way
consumers shop and buy goods and services, and has rapidly evolved into a global
phenomenon.
Many companies have started using the Internet with the aim of cutting marketing costs,
thereby reducing the price of their products and services in order to stay ahead in highly
competitive markets. Companies also use the Internet to convey communicates and disseminate
information, to sell the product, to take feedback and also to conduct satisfaction surveys with
customers. The number of Internet users in India is expected to nearly triple from 125 million in
2011 to 330 million by 2016, says a report by Boston Consulting Group (BCG). This rise in
Internet penetration will lead an increase in digital influence on people's purchase decisions.
Customers use the Internet not only to buy the product online, but also to compare prices,
product features and after sale service facilities the will receive if they purchase the product
from particular store. Many experts are optimistic about the prospect of online business.

On-line shopping is a recent phenomenon in the field of E-Business and is definitely going to be
the future of shopping in the world. Most of the companies are running their on-line portals to
sell their products/services on-line. Though online shopping is very common outside India, its
growth in Indian Market, which is a large and strategic consumer market, is still not in line with
the global market. The potential growth of on-line shopping has triggered the idea of
conducting a study on on-line shopping in India.

RESEARCH

There are a number of research works have been done by researchers but only a few has
been given, related to the paper.
Brown (1987) has suggested that the costs of a retail format refer to consumers‟ costs.
Consumers incur non-monetary costs - time, effort and psychological costs - as well as
monetary costs. Savings in non-monetary costs are especially emphasized by non-store formats.
Their appeal to consumers has been the ease and convenience of shopping, freed from location
and other constraints.

According to Rao (1999), E-commerce offers increased market activity for retailers in the
form of growing market access and information and decreased operating and procurement costs.
The consumers can gain better prices due to the competition and also can enrich their
knowledge on goods and services.

Zhang and von Dran (2000) have found that certain aesthetic elements of a web-site are
considered as purchase motivators, while other aesthetic elements serve as hygienic factors (i.e.,
necessities) in purchase decisions from e-retailers. The colour and background images of web-
page are also found to affect consumer choice.
Tractinsky and Rao (2001) have argued that computer users, particularly those who seek online
substitutes to the physical shopping experience, would value aesthetic designs just like
consumers of other commodities.

Ratchford et al. (2001) have told that through Internet, consumers can gather information
about merchandise and they compare a product across suppliers at a low cost. They also can
effectively analyze the offerings and easily locate a low price for a specified product.
 Eroglu et al. (2001) have advocated that the most important thing in the traditional
retailing is physical store setting. According to them, it is largely determined by the cost of real
estate and the various physical objects required creating different sounds, aromas, colours and
lighting.

Online constraints tend to be related to the screen resolution and the hardware that exists
at the consumer end of the channel. The hedonic factors in designing the web-site interface can
be enhanced with symbolic, nonverbal elements, which can be created by images, colours, fonts
and videos and music. Zeithaml (2002) has defined that the success of e-tailing depends on the
efficient web site design, effective shopping and prompt delivery. The other e-store services are
delivery on real time, return and replacement process, period of filling out online orders form,
speed of response time to e-customers‟ queries.

Kim and Lee (2002) have suggested that the design of e-store influences consumers‟
access to e-store. In the e-store, website design, design of product and service comparison and
information, time to complete online order form, easy of searching product and service, screen
layout, screen complexity, page composition, information retrieval methods, information
display, use of colour and background, assistance to the user and speed of accessing the e-store
are notable factors attracting e-customers.

Doolin (2004) has specifically pointed out that e-tailing is the sale of products and
services to individual customers. According to him, the definition of e-tailing encompasses the
sales of products or services online.

Rabinovich (2004) and Cao and Zhao (2004) have identified the challenges of e-tailing
industry. This challenge begins with the response time of the web-server; moves to the amount
of time the customer must wait until the order ships, and also includes the time the shipping
process takes.
Delone and Reif (2004) have found that at present customers are more likely to continue
shopping online when they have a greater experience of online shopping. It is also found that
young adults have a more positive attitude towards online buying.

Lavie and Tractinsky (2004) have expressed the expressive aesthetics of web-sites that
convey a sense of creativity and uniqueness. This type of aesthetics is likely to serve an
important role when shopping for specialty goods. The expressive design is relevant to specialty
goods because of their unique characteristics that emphasised the shopping experience.
Bauer et al., (2006) have compared the services of online retail service vs. traditional
retail services. They have identified that the online retail services are broken into two rather
distinct phases: the client interaction phase taking place online and the fulfilment phase taking
place offline. They also have suggested that web-site quality is a matter of delivering both
hedonic and utilitarian elements.
 CONSUMER BEHAVIOR IN INDIA
Though world is changing shopping tradition rapidly but in India online shopping is still not
that much popular. Number of customers who are opting online shopping store is increasing but
slowly. Traditional or conventional methods of shopping are more popular in India. People are
aware of conventional methods of shopping hence here are glancing at online means of
shopping. Online shopping trends in India have continued to evolve over the last few years
only, providing residents with the means to shop from the comfort of their own home for goods,
apparel, electronics and so much more. Many of those who own computers within India have
taken the steps to start shopping online with ease. While this may not have been the first
country to introduce e-shopping, India is catching up quick with growth and advances being
made each and every day. Many different retailers from across the world are stepping up their
game and offering their services to Indian residents. Some sites may offer free shipping to India
while others have a small extra shipping fee. In-store pickup may also be available for those
shopping online at stores that are commonly found within India. The possibilities are endless
when opting to do your shopping online.

According to the report titled “From Buzz to Bucks: Capitalizing on India’s “Digitally
Influenced” Consumers,”, 40 per cent of India's 90 million urban Internet users say that online
activities such as product research and price comparison influence what they buy. The digital
influence, currently affecting $30 billion of urban consumer spending is expected to greatly
accelerate over the next four years.To determine how Internet use affects buying decisions,
BCG's Centre for Consumer and Customer Insight surveyed 25,000 Indian consumers on their
online activities during each step of the purchase cycle, in 101 different product categories.“We
found that the growing digital influence is particularly important in categories such as
appliances and consumer electronics, in which 40 to 60 per cent of buyers have access to the
Internet, and more than a third of them are relying on the Internet for product research or price
comparison,” said Arvind Subramanian, a BCG partner and co-author of the report.
 The demographics of Indian Internet use revealed that men are far more likely than
women to be on the Internet (32 percent versus 12 per cent) and more than three times likely to
be digitally influenced (14 per cent versus 4 per cent). Although higher income levels are well
represented online, even 18 per cent of the lower-income “strugglers” (whose annual household
income is less than Rs 1.5 lakh) have Internet access, and 6 percent are engaged in commercial
activity online, the report said. The report also showed that only 30 per cent of online buyers
were drawn to Internet shopping for discounts. A higher proportion (37 per cent) valued the
convenience of shopping from home, and 29 per cent said that they appreciated the expanded
variety of products available online compared with what is available at brick-and-mortar stores.
In contrast to more advanced e-commerce markets, digitally influenced consumers in
India rely on company websites for detailed product information as frequently as they refer to
third-party sites for comparative research and online purchases.
Overall, the Internet has the highest penetration among people ages 18 to 24 (48 per cent)
and the lowest among those older than 54 (6 percent). The Internet is projected to reach small
towns and the low rungs of the economic ladder more quickly than retail chains will, bridging
geographic barriers and feeding the growing appetite for consumer goods, the report said.
Current trends in online shopping in India show that the majority of buyers choose to
shop at websites that allow them to purchase a wide variety of items from a range of different
stores rather than one, select retailer. When purchasing electronics and other goods, many
Indian shoppers rely on opinions and online reviews from other users from around the world. In
a recent study, it has been determined that within the next year alone, eight out of every ten
Indian consumers will make at least one purchase on the internet.
Companies are facing a tough competition in this dynamic arena of business. They are
always looking for new avenues so that they can increase contact with consumers and in for this
they are letting no stone unturned. In this regard only, the latest trend is online shopping.
Nowadays, the concept "DIC" i.e. double income couples are becoming all the more prominent
in India. With the long working hours and increased distances to travel, they are not having
enough time to devote it to shopping as people don't feel like going out for buying day to day
things after a very hectic day at office. They want to reserve it for other works like socializing,
entertainment etc. Now the companies are coming up with the ways so that this section of
society can be tapped to the maximum and only way to attract them is a convenient way of
shopping any time and what can be more convenient for them than a shop which is just a click
away and that too at any time 24 x 7. Moreover, this is located in the virtual world and can be
accessed any time when you are watching your favorite TV show or having a coffee break at
office. This is the online shopping concept.

Factors influencing consumers’ online trust in e-tailing which are discussed below.
1. TRUST:
When any market develops, there is a fine balance between demand and supply. In India
what We have observed is that whenever a trend starts several people jump in and soon supply
starts to exceed demand and that causes all kinds of issues in the market. Classic example is the
real-estate market in cities like Pune where prices were artificially pushed up by the builder-
agent nexus and then when the recession hit, we have a situation of too much inventory,
declining prices etc. I believe the e-commerce space will see a lot of bad business practices
adopted by the "me too" guys trying to survive the game.
Online shopping provides all type of goods to be available in the virtual world. It is just
like a shop in the neighborhood, selling all type of goods but with some prominent differences.
Here one can access these shops any time without stepping out of their home/office or any
convenient place.
The primary reason for online risk perception being high among the consumers stems
from the lack of trust in online shopping. Trust is one of the most frequently cited reasons for
consumers not willing to purchase online and plays a critical role in facilitating online
transactions. In the anonymous digital world trust is critical for building relationship with
customers and at the same time extremely difficult to build in the minds of the consumers.
In a digital world where physical interaction is more or less absent, and product qualities
and benefits must be presented in a convincing way over the wired network, building trust
becomes increasingly important. Customers tend to choose a provider that represents a set of
attributes that can be trusted. If consumers trust E-trailers then they will feel comfortable in
doing transactions and disclosing personal information to them. Engendering trust in consumers
is one of the challenges that online firms have to confront. So it is of utmost importance for the
online merchants to understand the factors influencing online consumers’ trust in e-tailing.
Snap deal has torn away from the rest of the market. Most of the other players are trailing this
market and some like Toggle closed shop.

2. INTEGRITY :-
This is the most important factor influencing consumers’ online trust. Integrity is
consistency of actions, values, methods, principles, expectations, and outcomes. Integrity is
regarded as the honesty and truthfulness of the E-trailer’s actions. There are fifteen loads to this
factor.

3. SECURITY AND PRIVACY :-

Security crimes the protection against danger, loss, and Privacy means the state of being
free from unsanctioned intrusion. There are four loads to this factor namely privacy policy
clearly stated, secured online payment process, privacy policy can be found easily in the web
site, and security seal of trusted third party. Consumers’ perception of risk reduces drastically if
they feel that the online merchant does not compromise with their security and privacy
concerns.

4.USEFUL INFORMATION:-
Useful information can be used advantageously, beneficially, or for several purposes. The
variables that load this factor are detail information about the product, and ability of the web
site in providing information tailored to customers’ needs. In the online market place where
physical interaction is more or less absent, consumer’s confidence can be gained by providing
extensive information about the marketer’s offerings and at the same time filtering the
information content according to the consumer’s needs.
5. CONVENIENCE IN USE:-
Convenience is anything that saves or simplifies work, adds to one's ease or comfort.
This factor contains the variables web content easy to read and understand, and site map
available. If the E-tailer’s web site is not convenient to use then the consumers will feel
uncomfortable and may perceive the web site not easy to use resulting in dissatisfaction.

6.WEB DESIGN:-
While design is the art and process of integrating individual elements of design into a
pleasing unity. There are two loads to this factor namely; web design is the creation of web sites
focusing on both the aesthetics and the mechanics of a web site's operation. It focuses on the
look and feel of the web site web content visually appealing, and web site has a professional
look. A visually appealing web site with a professional look generates the “feel-good factor”
among the consumers and reflects the brand image of the E-tailor or befitting the business it
carries out.

7. MOUTH TO MOUTH PUBLICITY:-

Word of mouth creates awareness, perceptions, attitudes, and behavior. Word-of-mouth
promotion is important for every business, as each happy customer can bring in dozens of new
ones. Mouth publicity had been proved very effective means of publicity, which is also without
any investment. If we talk of investment that is product and good service. Recently, I went to a
aayurvedacharya, some about 90 km from my place, there I came to see that most of the
customers, who came for treatment were due to mouth to mouth publicity. One patient got
relief; he told to some other one, this is how chain go on.

8. LOGISTICS AND SUPPLY CHAIN:-

India's logistics sucks. We still have 3rd world logistics. A large part of the ecommerce
success in the developed nations was because they already had rock-solid logistics in place. In
the US fedex, ups and USPS were already around nationwide and goods could be moved within
24 hours between 5000 miles. In India trying to find an address or a location is a nightmare.
We don't even have a properly standardized "physical postal address system". Every time
someone ships a product to me we invariably get a call from the courier company asking for
directions even though we live in a very prominent address in the city. This just surfaces some
of the basic issues that face India. Courier companies don't even have bar code readers to scan
the packages in transit. In the US, the logistics companies use very sophisticated technology
keep the customer informed of the transit of a package. High quality global journalism
requires investment.

Companies such as daily deals website Snapdeal.com and Redbus.com, an intercity travel
website, have also seen their revenues grow more than 200 times in three years on the back of a
growing culture of shopping online, not just in Mumbai or Delhi, but also in mid-tier cities like
Hyderabad and Jaipur. But having to rely on third-party logistics, poor road transportation, and
sometimes a lack of addresses poses difficulties in delivering to more remote cities, while
millions of potential customers go untapped due to minimal financing for broader marketing.
 It is fairly easy to operate in one city but to reach mid-tier cities is far more problematic
for any of the new entrants in this sector. Many companies now some sort of consolidation
because they will not be able to raise money as easily as last year or meet projections.
Industry members remain confident about the sector given rapidly increasing internet
usage in India, especially via cheap smart phones, and as the government stalls on reforming
India’s largely un-organized physical retail space.All of this are important as it plays directly
into the overall customer experience of ecommerce. We have ways to go before we can see
WOW levels of customer experience in this industry. Companies like Flip kart are doing a
great job working around the issues in the logistics industry by setting up their own logistics
.Largely the other 99% of the players will not be able to solve the logistic issues that exist in the
market

9. PAYMENT AND COMMISSION:-

Large volume of transactions in India is cash-based transactions. A small fraction of
Indians have virtual payment instruments like credit cards or bank accounts. Almost everyone
has started COD in India and for the right reasons. However, my thesis here is that this is
incredibly hard to scale. As humans are involved in the collection of cash etc, fraud rates will
be very high which will dip into the margin levels of the ecommerce players.
This is a major challenge and results in poor customer experience. The payment gateway
vendors and banks suck at technology. Payment gateway error rates are high (>25% of
transactions fail at the gateway). RBI has made it really hard for anyone to use virtual mediums
of payments (credit/debit cards, cash transfers etc). Payment gateway's and banks also charge
way too much Largely we are a cash driven economy. Commission on each transaction which is
bad for the smaller players - which eats into their margins significantly. The mode of cash
payment are favored by people because why they can bargain also and nothing as commission
charges are applicable.
Internet is changing the way consumers shop for goods and services, and has rapidly
evolved into a global phenomenon. There are 38.5 million Indians online as per the latest
forecast from Internet and Mobile Association in India. The current growth rate is 54% and it is
expected to accelerate further. Driven by the need to save time by urban India and ever
increasing population with internet access, E-Commerce Industry in India was worth Rs. 7080
crores at the end of 2006-07. E-tailing is the biggest part of electronic commerce and was worth
of Rs. 850 crores in the year 2006-07 and contributed around 12% to the total E-Commerce.
This segment was expected to rise by 30% to Rs. 1105 crores at the end of 2007-08. Online
shopping is truly catching on in India. Every day air and railway tickets worth INR 300 million
are sold online.
Analysts reckon online retail accounts for only 1 per cent of India’s $450bn consumer
market, but they project growth of 14 per cent over the next decade as millions of young, tech-
savvy Indians adapt to the virtual shopping experience. The sheer amount of effort taken to get
a gateway and the failing transactions. This is an issue, but since it is all online and I trust RBI a
lot with their efficiency, I expect this to improve very fast. In the long run, I DO NOT believe
that COD is the way to go.

10. MARKET SIZE/CLV/MARGINS: -

 Much of the optimism about the online sector is based on the immense popularity of the
cash-on-delivery model, which caters to customers without bank accounts or credit cards.
Avenues Capital says up to 80 per cent of online purchases rely on this method of payment.
The downside emerges when customers refuse to pay due to delays in delivery or simply a
change of heart, causing up to 30 per cent of goods to be returned, says Aashish Bhinde,
executive director at Avenues Capital.
Besides the incremental cost, [the cash on delivery model] is often indicative of lower
buyer commitment, and ... managing the reverse logistics significantly adds to the cost. In
addition, the convenience and choice that such a model offers customers comes at the expense
of working capital that companies could otherwise pump into improving and expanding
delivery networks or much-needed advertising to build a loyal customer base.
we believe that while India is indeed a large market, the Customer Lifecycle Value will
be very low (similar to the mobile industry - India has the lowest levels of ARPU anywhere in
the world). Ecommerce players will have to resort to deep discounting to build scale. Amazon
had to do this for 9 years. In India the margins will be extremely thin due to the inefficiencies in
all the underlying infra for e-commerce like logistics, payments and cash collection.

CHALLENGES FACE BY INDIAN CONSUMERS

While online shopping is a good place for bargain hunting and to get products at a very
competitive price, it somehow has not worked its charm in India. The main reason for this is
that Indian consumers do not get any real value or incentive from this trend. Also, they are wary
about fraud, delivery and customer service which is not far from the truth. Following are some
of the few challenges we face:

1. SPREAD OF INTERNET: -
The history of the Internet in India started with launch of services by VSNL on 15 August
1995. They were able to add about 10,000 Internet users within 6 months. However, for the next
10 years the Internet experience in the country remained less attractive with narrow-band
connections having speeds less than 56 kbit/s (dial-up).This bottleneck was removed in 2010
when the government auctioned 3G spectrum followed by an equally high profile auction of 4G
spectrum that set the scene for a competitive and invigorated wireless broadband market. Now
Internet access in India is provided by both public and private companies using a variety of
technologies and media including dial-up (PSTN), xDSL, coaxial cable, Ethernet, FTTH, ISDN,
HSDPA (3G), WiFi, WiMAX, etc. at a wide range of speeds and costs. The country has the
world's third largest number of Internet users with over 121 million users (59% of whom only
access the Internet via mobile devices) in December 2011.
As of December 2011, total Internet connections stood at 22.39 million, with estimated
users exceeding 121 million. The number of broadband subscribers at the end of May 2013 was
15.13 million. Cumulative Annual Growth rate (CAGR) of broadband during the five-year
period between 2005 and 2010 was about 117 per cent. DSL, while holding slightly more than
75% of the local broadband market, was steadily losing market share to other non-DSL
broadband platforms, especially to wireless broadband.
 One of the major issues facing the Internet segment in India is the lower average
bandwidth of broadband connections compared to that of developed countries. According to
2007 statistics, the average download speed in India hovered at about 40 KB per second (256
kbit/s), the minimum speed set by TRAI, whereas the international average was 5.6 Mbit/s
during the same period. In order to attend this infrastructure issue the government declared 2007
as "the year of broadband". To compete with international standards of defining broadband
speed the Indian Government has taken the aggressive step of proposing a $13 billion national
broadband network to connect all cities, towns and villages with a population of more than 500
in two phases targeted for completion by 2012 and 2013. The network was supposed to provide
speeds up to 10 Mbit/s in 63 metropolitan areas and 4 Mbit/s in an additional 352 cities. Also,
the Internet penetration rate in India is one of the lowest in the world and only accounts for
8.4% of the population compared to the rate in OECD counties, where the average is over 50%.
Another issue is the digital divide where growth is biased in favour of urban areas;
according to 2010 statistics, more than 75 per cent of the broadband connections in the country
are in the top 30 cities. Regulators have tried to boost the growth of broadband in rural areas by
promoting higher investment in rural infrastructure and establishing subsidized tariffs for rural
subscribers under the Universal service obligation scheme of the Indian government. The
biggest problem in making online shopping a success in India is the limited spread of internet
services. Due to low usage rate of internet online shopping will take time to become a common
way to shop.

2. LANGUAGE BARRIER:-
As most of the online shopping portals are in English, so this has also posed a great
problem in front of the prospective buyers. In a country like India where English is not in
mother tongue and mass people use their mother tongue or regional language, its such a wide
use in internet many times creates problem due to lack of understanding on the part of the
customers. Even people educated in Indian languages are not in position to use internet as it is
in English mostly. Now days some web portals have started Hindi version also. It may increase
but most to the people found online shopping difficult due to language. As it is known that there
22 constitutional approved languages in India. Beside there are many other regional languages
too, which cover good area of customers. Urban people may be found conversant in more than
one language but people rural area are dependant mostly on one language. That is also most of
the time their mother tongue.

3. PLASTIC MONEY:-
Less prevalence of credit card is on more reason for the consumer remaining away from
this modern means of shopping. Although many sites are also accepting cheque, cash on
delivery and bank demand drafts but still a larger section of the service provider rest on this
plastic money. In Urban area people use bank cards and habit also has been developed among
them to use plastic money but in rural area it is in very less percentage. Improper function of
plastic money encashment machines, lack of knowledge, poor internet connectivity, improper
security means are big hurdles for propagation of latest shopping methods.
4. INEFFICIENT AND DELAYED SERVICE:-
Many cases of delayed delivery, damaged or inferior goods, quality issues and even
instances of cheating where the goods were never shipped have been reported. The much
proclaimed ease and convenience comes with a heavy price and overall, Consumers do not have
a good experience with the results of online shopping. Delivery of goods is also up to main
cities, small cities like Tehsil places of other small towns and villages are not covered for
supply of goods.

5. OVERPRICING OF PRODUCTS:-
Most of the goods are overpriced and if at all any products are priced at a reasonable rate,
its quality is compromised. Besides that, there is no feature like exciting prices, killer deals,
delivery guarantee, after sales support nor replacement warranty. Shipping charges also make it
overprized. If a customer use conventional method of shopping, he or she can have goods on its
basic price.

6. RETURN AND EXCHANGE OF GOODS:-

When anyone buy goods online she or he has additional rights to return them because
decision for purchase of any goods is based on a brief description or a photograph – so what
you receive isn't always quite what you’d expected. Under the Consumer Contracts
Regulations people have the right to return your order up to 14 days from the day you receive
your goods. Many online retailers extend this even further so be sure to read the terms and
conditions carefully as you may have longer to return unwanted items. But problems begin
when people are not having knowledge of returning it. If a goods has been returned refund
delayed. Many times it is found that money has not been refunded. Although there is consumer
protection court but charges for filing complaint or case it not within reach of common people.
Sometimes refundable money is less than charges of court. So, people decided not to shop
online.
There is also one problem if material has been delivered to a customer, but due to family
problems he or she did not find time to return goods in recommend time. Some companies
advise to return good through registered post with clearly statement on the invoice the reason
for return and whether you require a refund or exchange, we are only able to exchange items for
the same product. Personalized Items are non-returnable. Some goods are non-returnable for
hygiene reasons. Please note that this does not affect your statutory rights.
 Five Tips for Online Shopping Safety
One of the coolest capabilities enabled by the Internet is that when you’re using it, you’re not bound by
geographical location. This is especially handy when you’re shopping. Before the Internet, you were pretty
much stuck with the selection and prices in the stores around your home. Now, you can shop anywhere,
anytime, and you can be competitive about it.
Of course, there are some risks that come with shopping online, too. Although identity theft is more common in
the real world, it still happens online pretty frequently, as does credit card fraud. So staying safe while you’re
shopping online is paramount. Here are five tips for shopping safely online:
1. Choose Credit Over Debit:-
You probably don’t often hear advice to use a credit card instead of a debit card or cash, but if
you can do it responsibly, you absolutely should. Credit cards offer protection from identity theft that
debit cards don’t. For example, with a credit card, your liability for fraudulent charges caps at $50 as
long as you report the fraud within 30 or 60 days (depending on the company). However, if you’re using
your debit card online and someone gains access to it, they can clean out your checking account before
you even learn there’s a problem. It’s likely you’ll get part of that money back, but possible that it can
take a while, and that you won’t get it all. So, use a credit card instead and pay the bill off monthly.
2. Disposable Is Better:-
Even better than using a credit card is to use a disposable credit card. Disposable credit cards
work just like most gift cards. You add a specified dollar amount to the card, and it’s good until that is
gone. Once it’s gone, you can add more, or purchase a new one. And both Visa and American Express
now offer these cards in varying amounts, so they’re easy to get hold of. The bonus is that if the number
from a disposable credit card is stolen, it’s anonymous, and criminals can’t gain access to anything more
than the dollar amount that’s still available on the card.
3. Verify Website Security:-
The variety that’s available when shopping online can be dizzying, but it doesn’t stop at just the
products and prices that are available online. There are also different levels of security that are available
online, and you want to be aware of them. Some online web sites don’t offer secure shopping. That
means that savvy criminals can capture everything that you enter onto a form on those sites, including
 your personal and credit information. If you’re going to shop online, limit yourself to secure sites. You
can tell if a site is secure by the URL. A secure web site starts with HTTPS:// instead of HTTP://. Secure
sites will also have a small lock icon in the lower right corner of the screen.

3. Don’t Shop Publicly:-

If you plan to do any shopping online, do it at home. At home, you can shop in your pajamas
and you can do it any time of the day or night. You also know who accesses your computer at home. If
you’re using a public computer—at the library, at a cyber café, or at work—to do your shopping, you
have no control over who might be using that computer as well. You also don’t have any control over
what kind of spyware or malware might be infecting that computer. So, just don’t do it. Shop at home.
It’s much safer.
4. Don’t Store Information Elsewhere:-
Many shopping sites, even the major ones, offer you the ability to save your credit card
information on their servers to speed the shopping process. Think Amazon.com’s OneClick shopping.
It’s definitely faster, but there are some risks to maintaining your personal information elsewhere. If a
company that you’re shopping with has a data breach, your personal information could be put at risk. It
takes a little longer, but instead of storing your information on some server that you have no control
over, just enter it yourself each time you shop. Price and selection are two of the best benefits to
shopping online. But don’t let the benefits lull you into complacency.

Conclusion
E-commerce players in India are still not adhering to e-commerce laws and
regulations of India. For instance, Indian e-commerce, FDI regulations and cyber
due diligence are still not complied with by many national and international e-
commerce players. Even foreign direct investment (FDI), taxation and other
regulations are not followed by many national and international e-commerce
players in true letter and spirit. For instance, Indian government has already referred
the cases of Flipkart and Snapdeal to the Enforcement Directorate for alleged
violation of foreign direct investment (FDI) regulations. Similarly, a probe against
Walmart in India for market access lobbying has been ordered by Indian
government.

Online shopping has come up as a boon for all type of consumers and it has
something to offer for everyone. Despite of this fact that it is highly convenient and
time saving and to certain extent it is also cost cutting exercise as one need not to
step out of his / her home for doing shopping. The main area of concern is the
limited internet usage and language problem. A lot of stress need to be given on
these two parameters so that this IT revolution can be of use to everyone in India
and then only it can be a success in true sense of terms. Otherwise, it will just end
up being a style statement of few who wants to be away from the crowd and then it
will lose its applicability in the real world.

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Web:-
http://www.businessdictionary.com/definition/online-shopping.html
http://www.wisegeek.org/what-is-online-shopping.htm
http://www.thelawdictionary.org
http://content.time.com/time/business/article/0,8599,2004089,00.html
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http://gaikwad.in/facts-and-problems-about-ecommerce-and-online-shopping-in-india/
http://www.moneycontrol.com
http://www.mapsofindia.com
REMARKS