Marketing Research Project

ONLINE GROCERY RETAIL
GROUP 9 Tarun Chadha Hersh Kenkare Ekta Poddar Arnab Guha Mallik Atul Sharma Saurav Mishra Surbhi Bhatia (121) (091) (087) (074) (075) (112) (119)

Market Potential Of The Online Grocery Industry
• The graphs show the prowess of Asia in terms of its internet user base as well as in terms of growing internet penetration The internet retailing sector in India grew at 32% in the year 2010 and is estimated at Rs. 34.7 billion. Expected to grow at a CAGR of 21% in the next 5 years. Internet users in India is 140 million & is expected to have the third highest number of internet users in the world by 2013. Online grocery retail provides an elegant solution to various consumer groups such as Double Income No Kids (DINK’s) families, bachelors working long hours etc. Growth of the online grocery retail sector will provide benefits like convenience, time-saving, any time shopping etc.

Online Grocery Retailing in India
 Failure of Sangamdirect.com (started by HUL, then handed over to Wadhwan Group)  Competition with local Kirana Stores as well as with Modern Supermarkets & Hypermarkets  A few websites (mostly in South India) – but not professional  Supply chain and logistics – the major concern  The market for online grocery retail in India is small and fragmented with very few retailers like Groceryshop.in and Storrz.in having a reliable retailing infrastructure.

E-Grocers vs Supermarkets
Online grocery shopping site Traditional supermarkets •Price •Variety •Ability to attract new customers •Products can be verified •Personal service

Advantages

• • • •

Convenience – No traffic, no queues Time Saving and easy shopping 24*7 shopping Better prices as next shop is a click away Better comparison of products and prices

Disadvantages

• Products are difficult to find • Prices are higher than in a conventional store • Product quality cannot be verified •Narrower assortment than in a conventional store • Minor personal service or no service at all

•Crowding •Queuing •Time wasted

Method of Study

Management Decision Problem
 Feasibility study of launching an online retail store in India

 Research on consumer perception about online grocery retail
 Selection of products that consumers would purchase online  Identification of design features like website design and supply chain design

Research Questions
Is online grocery retail an attractive option?

Do working individuals opt for online grocery retail frequently?

What are the factors influencing the consumer in favor of online grocery purchase?

How does desired waiting time depend on type of grocery items ordered?

Hypothesis
Hypothesis 1: Customers’ negative sentiments regarding the risks of Online grocery retailing can be compensated by offering LOWER prices

Hypothesis 2: Customers want lesser waiting time for perishable and frequent use grocery items

Hypothesis 3: Customers are willing to pay HIGHER prices in exchange for the time and transportation costs saved in ordering groceries online

Findings from Literature Review
1. Consumers are increasingly looking for ways to save time. There is a general desire for more convenience 2. Household size and the presence of children are found to be variables for patterns of use of hypermarkets 3. The distance to travel to the shop is also decisive: • the proximity of stores determines the frequency of visits • the level of loyalty to a grocery store 4. In-home shoppers tended to live more than a ten minute drive away from the nearest grocery store. 5. Food-related lifestyle of a customer are also believed to influence adoption of Internet shopping (Seth and Randall 2005)

(Bawa and Ghosh 1999).

(Fox, Montgomery, and Lodish 2004; Bawa and Ghosh 1999)

Berkowitz, Walton, and Walker (1979)

(Grunert and Ramus 2005).

6. Internet shoppers are older and make more money than non-internet shoppers.

Donthu and Garcia (1999)

Focus Group Discussion

Goal of the FGD
• Explore qualitative factors about the research problem • Identification of areas to be taken up for detailed descriptive research

Number & Type of Respondents
• 8 people per FGD • First FGD had people who shop online frequently • Second FGD had people who have shopped online occasionally or not shopped online at all

Methodology
• Familiarizing respondents with topic to be discussed and motivation behind study • Discussion of one question at a time • Mainly open ended questions with more emphasis on personal opinions • No need to achieve consensus of any sort • Ensuring nearly equal participation

Focus Group Questions
• How often do access the internet? • How often have/ do you shop online? • Which sites do usually make purchases from? Any reason for preferring these? • What are the factors driving you to shop online? • What are your primary concerns with shopping online? • Have you ever purchased groceries online? Would you consider it if it were started? • What are the reasons behind your response? • How is shopping for groceries different from shopping for other items? • What grocery items do you think it makes sense to purchase online? • What mode of payment would you prefer?

Focus Group Analysis
• Factors positively impacting the decision to shop online include convenience, easy to compare prices, time and transportation cost saving, lower prices, special deals • None of the participants had shopped for groceries online but were open to the idea given their busy schedules • General concerns about online shopping included security concerns, lack of personalized service, returning defective items, non existent reviews • Groceries being time sensitive products presents special concerns like inability to inspect items, timely delivery • Preference for buying non-perishable like grains, rice, biscuits, coffee and tea, spices over milk, fruits and vegetables • Preference for cash on delivery • Online grocery shopping to be used mainly for replacement purchases rather than experimenting with new products

Depth Interview: Ms. Pooja Bhatia

Profile
• • • • • • • Age: 29 years Profession: Runs an institute training people for GD/PI Internet Usage: Moderate to Heavy Online Shopping: Frequent Products purchased: Books, music CD’s Preferred Sites: Flipkart.com, Infibeam.com Has shopped online for groceries on a couple of occasions

Questionnaire Design BROAD CATEGORIES OF QUESTIONS
Gauging internet usage & grocery consumption Factors impacting purchase decision

Selection of items to be sold

Logistics and Payment Preferences

Questionnaire Design

• Gauging internet usage & grocery consumption: place of access, frequency, grocery bill range • Factors impacting purchase: both positive and negative factors identified in FGD rated on Likert Scale, prioritizing among them, impact of price change on purchase decision

Questionnaire Design

• Selection of items: Respondents asked to rate most likely items of purchase (broad categories) on Likert Scale, Identification of importance attached to certain features of website to help with design

• Logistics and payment preferences: capturing perception on optimum method and amount of premium, desired delivery time, mode of returning faulty items

Data Analysis

1- least likely

5 - most likely

1- most likely

5 - least likely

1- least likely 5 - most likely

Response to various parameters determining the switch to online grocery purchase

Response to the various elements of the web portal

Hypothesis 1: Customers’ negative sentiments regarding the risks of Online grocery retailing can be compensated by offering LOWER prices

• A significant relation occurs between payment security and customers’ likelihood to use online grocery retailing • With increasing concerns about security, the likelihood to use online retailing increases with LOWER offered prices • Customers’ security apprehensions can be compensated by offering lower prices

• A significant relation occurs between lack of credit facilities and customers’ likelihood to use online grocery retailing • With increasing concerns about lack of credit facilities, the likelihood to use online retailing increases with LOWER offered prices • Customers’ negative sentiments regarding lack of credit can be compensated by offering lower prices

Hypothesis 2: Customers want lesser waiting time for perishable and frequent use grocery items
Mean value of responses
5 4 3 2 1 0

• Frequent use items like Rice, Oil and Milk and perishable items like

Vegetables have a significant relation with the Waiting Time variable • With increasing likelihood of ordering frequent and perishable items, the waiting time for delivery expected by customers decreases • Hence, customers expect that perishable and frequent use items have a low delivery time of less than 12 hours

Hypothesis 3: Customers are willing to pay HIGHER prices in exchange for the time and transportation costs saved in ordering groceries online

• Perceived positive advantages of using online grocery retail, mainly saved time and

transportation costs are significantly related to greater likelihood of ordering online by paying a PREMIUM charge • Customers who value the Time and Transportation Costs saved by online grocery shopping are willing to pay higher price for the goods

Factor Analysis

Logistics Issues

Resistance to change

THANK YOU

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