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Probability of Online Market will take over Retail Store after Covid 19

Continuous Internal Assessment 1, 2021

Probability that Online Market will Take over Retail Store in Near Future?

Subject Code –BECH 233

Faculty- Prof – Dr. Viji B

Department of Economics

CHRIST (Deemed to be university), BGR Campus

Submitted By

Arnab Sen

2033412

3ECOH B
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Probability of Online Market will take over Retail Store after Covid 19

Abstract

This paper mainly highlights the usage of probability and descriptive statistics to understand

how the future of e-commerce will change over time and by what chances covid -19 act as a role

to shift the market of retail business to online sale. The paper briefly points out that use

probability plays an important role to help the future businessman to understand their investment

patterns. The different axioms of probability used in the paper acts as a medium to help us

understand the future outcome on the basis of present thinking population. It also highlights how

policy makers can leverage the potential of digital transformation in retail and related areas to

support business adaptation and to enhance social distancing, while ensuring that no one is left

behind. With the usage of Bayes Theorem, one of the most important answers of the survey is

provided in the paper and also the meaning that on what parameters future consumers like in the

online market which inclines there buying behaviour towards it. The paper uses axioms like

dependency and independency test to see up to which extent the variables are related to each

other. Also, with the usage of Permutation and Combination the paper analyses the ways of

choosing a market for shopping in reaction to pre and post pandemic. The bell-shaped graph

gives us the inference of weather the distribution is normal using descriptive statistical tools.
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Probability of Online Market will take over Retail Store after Covid 19

Introduction

Overview and Background of the Topic

The Indian retail market sector is greatly divided between the unorganized sec which comprises

of 13.9 million conventional families which run neighborhood store and organized retail sector

share less than 10% in the overall market contribution. The organized sector includes of mortar

stores and online e-commerce websites which has increased the demand of present value of

shopping trends. The outbreak of covid 19 has brought a massive change in the buying behavior

and consumption patterns of the general public. Although covid has large scale negative

implication like closure if shops which has left no option to general public other than using e-

commerce. There was seen a huge boom in B2C e-commerce commerce during covid time yet in

majority of areas continue to have more faith in neighborhood brick and mortar stores for

shopping as they prefer physical experience and negotiating discounts over the counter, draw

customer to shop online by offering bargains such as free delivery, discounts and exchange

offers. The usage of probability in this specific topic helps us to know what will be the future of

Indian Commercial Market after covid. With the change in buying behavior patterns the axioms

of probability help us to predict and draw important conclusions on the basis of relationship of

different variables collected from the sample of forty. The graphs plot the distribution of

consumer taste and preference on online and offline market relation with pre and post covid

scenario.
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Probability of Online Market will take over Retail Store after Covid 19

Research Methodology

The study undertaken is in the nature of an exploratory research conducted to estimate the

implications of change in buying preference of consumer in pre and post covid and exploring the

research question of estimation of probability that will online market will take over retail

business after the pandemic and its economic as well as social impacts on the country. The

Sample Size of 40 people was taken and a questionnaire asking their preferences has been

recorded and analyzed using appropriate probability tools and axioms to derive significant

conclusions. The 4 central variables taken during the survey includes the frequency of shopping

before covid measured in week, months and all and similarly for frequency of shopping after

covid measured in similar terms. Also, the other two approaches which has been related to the

frequency are the preference of shopping before and after covid 19 with offline and online as its

parameters. All the other variables during the research have been taken as exogenous to help in

isolating the many independent variables that influence the probability outcome. The primary

data has been collected as a measure of first-hand information, through Questionnaires to

maintain originality and uniformity in the data collection method. The reliability and credibility

of these sources is ensured as they are globally recognized databases, repeatedly referred for

research studies. The major statistical tools, namely, measures of central tendency, descriptive

statistical analysis, probability theorem, fundamental counting principal, additive and

multiplicative thermos, conditional probability and its application as Bayes Theorem has been
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Probability of Online Market will take over Retail Store after Covid 19

extensively used according to the type of data set. The usage of choice in Permutation a

Combination with binomial distribution model has also been shown as graphical analysis.

Analysis and Interpretation of Primary Data

Primary data analysis is the original analysis of the data collected for a research study proposal.

The analysis of the primary data is the process of making sense of the collected data to answer

the research questions or support or reject research hypothesis that a study is originally design to

access. The data collected is a real time data which means the data collected was at the time of

the research project.

 Method Of Collection: The topic for our research work is upon the one of the most

important consumption factors as in the impact of future buying behavior pattern and

sustainability of online markets after covid across India. For the primary level, the

questionnaires were mailed to the field of investigations and send it to respondents, to

collect the valuable information for our research. The population sample in our research

work was taken to be 40.

 Primary Research Methodology: The methodology of research work, in the case of our

primary data is a mixed research framework which includes both Qualitative as well as

Quantitative research work. The questionnaire circulated takes down the opinions of

people based on qualitative surveys and backs them by supplementary quantitative

research. In our questionnaire it collects the information and perspectives of the people
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Probability of Online Market will take over Retail Store after Covid 19

upon their buying behavior and impact of covid 19 on their frequency of purchase with

provide appropriate figures like income to define them.

 Summary of Responses

o The first question being frequency of shopping before covid 19 where the

maximum number about 32% selected once in two weeks and 30% monthly and

25% weekly and more. At the same time on comparing with frequency of

shopping after covid was seen more as 30% selected weekly followed by 27%

was monthly and 22.5% was a once in a month.

o On analyzing and comparing the mode of shopping before and after covid which

brings us to the most important objective of our survey and help us predicting the

future of online business in India as 72.5% people prefers online mode whereas

23.3% people prefeed online before covid 19.

o The electronic market is said to have maximum share as 32.3% holds the largest

consumer preferred good and it can be foreseen that electronic market for online

share holds the maximum consumed base in compared to clothing and sports

goods which are 22% and 16% respectively.

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Probability of Online Market will take over Retail Store after Covid 19

o Lastly, we also found that more than 40% compare the process of the product

they buy with different websites and try to make the best deals which sows the

variety of collection the online market has and more than 37.5% people buy the

things they don’t require seeing the deals on the home page.

Statistical Analysis of Probability Axioms

 Normal Probability- As for the first two questions which speak about the frequency of

buying before covid 19 can be seen as daily 0.3 which means that the probability of a

consumer that he will choose an offline purchase of a product in daily basis is 3%.

Similarly, on comparison a consumer buying goods on a weekly basis is 0.2% which

means that there is 2% chance that a person chosen will weekly buy a product online

during covid 19. On the same note we can draw conclusions on the basis of probability

calculated on weekly, monthly, daily, twice in a month basis both for pre and post covid

times. The probability expresses the percentage of happening of an event a where the

total possibilities by an event can happened is given.

 Descriptive Statistics Analysis

o Mean: The mean or the average was found out to be 8 for pre covid and 13.33 for

post covid which means an average household holds average frequency as 8 to make

online purchase before covid. However, it has increased to 13.33 in covid times.
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Probability of Online Market will take over Retail Store after Covid 19

o Median- The median of the research was found out to be 10 which means that half of

the population holds frequency lower than 10 and half of them holds frequency more

than 10 in their buying behavior in pre and post covid.

o Skewness- The skewness of the research work is found out to be -0.043 which means

the data set is negatively skewed which means more values are concentrated on right

side, while the left tail is longer in case of before Covid 19. The skewness value is

1.89 for after covid situation which depicts positive skewness.

o Kurtosis- The value of kurtosis is found to be -0.29 which means the distribution is

flat and has lighter tails when compared to normal distributions for pre covid. The

post covid gives the values as 4.33 resulting a bell-shaped normal distribution.

o Range - Range is the simplest measure of dispersion which basically explains the

difference between smallest and largest terms in a model. It is a quick measure of

viability and provides a broad picture of the data at a glance. In the case of purchase

behaviour before covid, the range is 11 and for after covid purchase rate it stands at

40.
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Probability of Online Market will take over Retail Store after Covid 19

o Standard Deviation- Standard deviation is the square root of the arithmetic average of

the square of the deviation measured from the mean. It basically studies how much

variation or dispersion exists from the average or expected value. In the case of

Purchase Behaviour before covid standard deviation is found to be 5.14 which means

all the data points are very close to the mean or the average. With respect to purchase

after covid, the standard deviation is found to be 13.73 which simply means that data

points are spread over a large range of values away from mean.

o Variance- Variance is another measure calculated on average squared deviations from

the mean. It helps in measuring the viability of the data set. By variance we can easily

measure the spread of distribution and the distance between data and population

mean. In the case frequency of purchase before covid 19is found to be 26.5 which

means the data points are spread in near area and close to mean value.

 Conditional Probability Analysis

It is likelihood of an event to be happened and the calculation of probability is dependent

upon the occurrence of a previous event or outcome. It is calculated by multiplying the

intersection of two events by the chance of happening a event. A conditional probability

helps us to analyses two events in a relationship with one another such that statistical

inference could be drawn from it. In this can we can make inference that if a person is

chosen at a random from a set of 40 people the probability that he will do a monthly
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Probability of Online Market will take over Retail Store after Covid 19

shopping from online store is 0.17 or 17%. Similarly, we can also infer that after the

outbreak of Covid, suppose if a person is chosen at a random the probability that the person

will choose online shopping in twice a week can be calculated as 0.35 or 35%.

 Bayes Theorem

The statistical analysis of Bayes Theorem is an extended form of conditional probability and

help us to understand based on prior knowledge and conditions of events which are yet to be

satisfied. The central point of the research helps us to answer through base theorem, for

example if a person is selected at a random, what is the probability that he will purchase

from online websites after the covid 19.

Figure 1 Base Theorem calculation using tree diagram

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Probability of Online Market will take over Retail Store after Covid 19

 Permutation and Combination for Choosing

The Concept of permutation and combinations is widely used for estimating probability

statistics when from a group of data certain things need to be choose and then put to

analysis. This has evolved from the fundamental counting principle, when the option of

variety of goods to be chosen from a online market is laid out and the person is instructed

to chooses one of the possible outcomes from the group, the function measures the

number of ways of doing the things. In our analysis there were given 6 items mostly

purchased from online market, upon that a random person choosing one option over 6

had 6 ways and choosing two has 15 ways and so when the order does not matter. The

choice of events upon the sample size can be calculated using permutation and

combination.

 Independent, Dependent events and Normal Distribution

The last probability axiom which was used in the analysis was the test for dependence

and independence which would help us to infer that the multiplication of P(A)

intersection P(B) divided by probability of A*B gives us the basic understanding if the

happening of one event will have any successful impact on second event which might

influence the probability condition. This also means that if boosting of online sale have

any relation to covid 19, then the two events are dependent on each other.

Also, the graph made with the skewness, kurtosis values with standard deviation and

average into consideration gives us a bell-shaped curve.

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Probability of Online Market will take over Retail Store after Covid 19

Concluding Remarks

The emergence of online channels in a market can bring substantial changes to the market’s

economic fundamentals and, through these changes, affect outcomes at both the market level and

for individual firms. There has been recorded potential shifts which has large scale implications

in turn for firms’ competitive strategies. Incumbent offline sellers and new pure-play online

entrants alike must account for the many ways a market’s offline and online channels interact

when making pricing, investment, entry, and other critical decisions. The probability approach

discussed in this paper help us to understand the market situation in near future and gives us

insight if a online e commerce website will prove effective in taking over the market in near

future.
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Probability of Online Market will take over Retail Store after Covid 19

References

(Liber and Syverson, 2010) Offline and Online Market Analysis

Retrieved From: https://www3.nd.edu/~elieber/research/online_offline.pdf

(Meyer,2020) Understanding Covid 19 behaviour on Online Market

Retrieved from: https://www.bigcommerce.com/blog/covid-19-ecommerce/

(OECD,2020) E-Commerce at the time of Covid 19

Retrieved from: https://www.oecd.org/coronavirus/policy-responses/e-commerce-in-the-time-of-

covid-19-3a2b78e8/#biblio-d1e705
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Probability of Online Market will take over Retail Store after Covid 19

Appendix
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Probability of Online Market will take over Retail Store after Covid 19