Factors Influencing Customers’ Perception towards Online Shopping

Table of Contents

1. Introduction
1.1 Overview
1.2 Objectives of the study
1.3 Scope of the study

2. Review of Literature

3. Research Methodology
3.1 Type of Research
3.2 Sampling Unit
3.3 Sampling Technique
3.4 Questionnaire Design
3.5 Data Collection Sources
3.6 Plan for Data Analysis

4. Data Analysis and Interpretation
4.1 Factor Analysis
4.2 Net promoter score

5.1: Conclusion
5.2: Findings

6.1: limitation
6.2: future directions

Bibliography

Appendix I – Questionnaire
Appendix II - Sample profile

List of Tables

4.1.1 KMO and Bartlett's Test

4.1.2 Communalities

4.1.3 Total Variance Explained

4.1.5 Rotated Component Matrix

4.1.6 Reliability Statistics for Customer Service

4.1.7 Reliability Statistics for Convenience

4.1.8 Reliability Statistics for Experience

4.1.9 Reliability Statistics for Value added service

4.1.10 Reliability Statistics for Product related information

4.2.1 NPS%

List of Figures

4.1.4 Scree Plot

4.2.2 NPS %

CHAPTER-1 Introduction

1.1: Overview

1.2: Objectives of the study

1.3: Scope of study

Abstract

Online shopping is having very bright future. Perception towards online shopping is getting better in India. With the use of internet, consumers can shop anywhere, anything and anytime with easy and safe payment options. Consumers can do comparison shopping between products, as well as, online stores. In present scenario customers are busy that they don’t have enough chance and time to go to shopping centers and purchase the things they need, everybody likes to do online shopping. In online, Product assortment is very huge to choose, and make immediate comparison in price, quality, variety, colour and also get product based information like customer feedback.

The main purpose of this paper is to determine the “Factors Influencing Consumer Perception towards Online Shopping”. The objective for this research is to know the customer perception and identify the factors which influence the online customer’s.

A quantitative research design which is descriptive and exploratory in nature was selected to gain insights about customer perception towards online shopping. The questionnaire prepared by using Likert’s five-point scale ranging from (1-5) where 1 Means ‘not at all important and 5 Means ‘most important ‘.The research has taken use of closed ended questions. The data collection was done over a period of 8 weeks this was done by going directly to the respondents or through mails. A total number of respondents taken for this study are 154. The collected data is analyzed in statistical method of factor analysis in the IBM SPSS 20.0 software. The data collected on 30 variables was deducted into five factors in the software and analyzed accordingly.

The survey revealed that different customers have different perception towards online shopping; most of them having a very good attitude towards online shopping but there are certain customer who still find difficulties or we can say apart from several benefits has some disadvantage in mind of customer. Customer perception keeps on changing with time to time which is to be taken in the consideration.The most important factors that can be taken into account to understand the Internet shopping (Customer Service, Convenience, Experience, Value added service and Product related information).

1.1: Introduction

Online shopping is the system whereby buyers purchase products or service from a seller in the real-time, over the Internet. It is a type of electronic business. The origin and growth of Internet have been the biggest event of the century. E-commerce in India was started in 1999 to a period where one can sell and find all sorts of stuff from a high-end product to a meagre peanut online. Most corporations are using the 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. The Internet has completely changed the way one handles day-to-day transactions; online shopping is one of them. The Internet has brought about extensive changes in the purchasing habits of the people. In the comfort of one's home, office or cyber cafe or anywhere across the world, one can log on and buy just about anything from apparel, books, music and diamond jeweler 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.

The process of making a decision is extremely similar whether the customer is offline or online. But some major differences are shopping environment and marketing communication. According to traditional consumer decision model, Consumer purchase decision typically starts with need awareness, then information search, alternative evaluations, deciding to purchase and finally, post-purchasing behavior.

As far as online, when customers see standard advertisements or online promotion, these advertisements may pull in customers' attention and stimulate their interest for specific items. Before they decide to buy, they will require extra information to help them out. On the offline shore they don't have enough chance to know the information; they will look through online channels, e.g., online lists, sites, or web indexes. Whenever customers have enough information, they should look at to compare those choices of products or services. In the search stage, they may search for the product reviews or customer comments. They will discover which brand or organization offers them the best fit to their desire. During this stage, the attractiveness of the web and the pleasing new collection or design is essential things to convince shoppers to be interested in buying product and service the most helpful characteristic of online is that it supports the pre-purchase stage, as it helps a customer to think about various alternatives. During the buying stage, product assortment, sale services and information quality appear to be the most vital point to help a customer to choose what item they should choose, or what seller they should purchase from. Post-purchase behavior will turn out to be more crucial after their online buying. Consumers sometimes have a problem or concern about the product, or they might want to change or return the product that they have bought. Thus, return and exchange services turn out to be essential at this stage.

RajanAnandan, VP & Managing Director of Google India (2013); said “With approximately 8 million Indians shopping online in 2012, online shopping industry in India is growing rapidly and will continue to see exponential growth. By looking at the trends in 2012, we expect 2013 to be a strong growth year for players who’re focused on fast-growing categories like apparels & accessories and niche product categories like baby products, home furnishings & health-nutrition. We expect the growth to come from outside of top 8 metros as was evident in ourrecently concluded ‘Great Online Shopping Festival’ which saw over 51% of traffic from non-metros.”^[1]

According to Internet World Stats in March 2017, India has the second largest number of internet users in Asia after China having a 24.7 percent of users. Based on the Internet Live Stats, India’s count of internet users has been increasing at a rate of 4963% from 2000 to 2017^[2]. This large internet user base will have a direct effect on the Indian online shopping business. In fact, Google India mentions that around 55 million Indians purchases products online and this number is rising every year. The swift increase in the usage of the internet over the past two decades, as a place for buyer-seller dealings, is significant of the extent of recognition of online transactions. The growth of e-commerce industry has led to a sizeable increase in the online transactions. According to the Associated Chambers of Commerce and Industry of India (Assocham), the size of the e-commerce industry is likely to grow at an annual rate of 25% to Rs.2500crore by 2017^[3]. The online industry has seen a jump in the number of transactions with the change in the consumer buying behavior from a physical store to an online store.

This extraordinary increase in the online transactions is due to advances in technology, changing behavior patterns of the consumers and sometimes situational influences. Shopping online is generally defined as the idea of buying and selling of products over the internet. The sellers’ viewpoint is to convince and catch the attention of the prospective consumers’ to purchase products and make sure that he/she is satisfied. The buyers’ outlook towards online shopping is the extent to which he/she can access, browse, purchase, transact and repeat the same behavior. In this digital age, consumers are driven by the technology. They are searching for the product on the internet and eventually buying it. Sometimes there are a lot of hesitations and doubts while shopping online. Some of the most prominent ones being risk involved in sharing financial and personal information, inability to touch and try the goods before purchasing and concerns related to not getting the right product.

Customer perception is a marketing concept that encompasses a customer’s impression, awareness and consciousness about a company or its offerings. Perception is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. A customer’s perception is affected by advertising, reviews, public relation, social media, personal experience and other factors. In general, perception is gathering information through seeing, hearing, touching, tasting, smelling and sensing. Perception is the process by which these stimuli are selected, organized, and interpreted. Customer perception enables the marketing manager to understand how the customer views a product or service and then formulate the strategy accordingly.

At this backdrop, this study was decided to understand the customers’ perception towards online shopping.

1.2: Objectives of the study

- To understand the consumers’ perception towards online shopping.
- To identify the factors influencing the consumers’ perception towards online shopping.

1.3 Scope of the Study

From this study, one can get knowledge about what factors influence customers’ perceptions, their attitude towards a product and services.This study helps to know about the opinion of the customer about online shopping. It helps the online shops to carry out their business successfully by understanding customers’ perception, taste and preference towards products and services offered at the online shops.

CHAPTER-2 Review of Literature

2. Review of Literature

E-Retail has changed and expanded in all lines of business, be it apparel, jewellery, footwear, Groceries, electronics etc. In today’s competitive world, with increasing number of online retail stores, the retailers need to be more customer-oriented.Indian businesses need to understand the changing behaviour of customers towards shopping in organised wed sites. The focus of much of the research is on the ‘disconfirmation of expectations’ theory which explains that “the customer is satisfied when he or she feels that the product’s performance is equal to more than what was expected (confirmation). But if the perceived performance falls short of his/her expectations (disconfirmation), then the customer is dissatisfied”. And also website design, website reliability, customer service and privacy are the four key factors which influence consumers’ perceptions of online shopping(Alamosa, 2011).

Sarigiannidis&Maditinos (2011) explains that around half the internet users have bought a product or service through the internet and according to (Li and Zhang, 2002); online shopping is the third most well-liked internet activity. Most of them have tried to identify factors that affect or contribute to online consumer behaviour. Researchers seem to adopt different points of view and focus on different factors in different ways.

A study done by Indian Institute of E-commerce, according to that by 2020 India is expected to produce $100 billion online retail revenue. Out of which nearly $35 billion will be through fashion e-commerce. Online apparel sales are set to grow four times in coming years. (Marie, 2005); discussed how consumers react and behave with respect to the e-commerce in India which is at the very nice in stages to as competitive western world, if you look at the e-commerce in India are we are a 16-billion-dollar market in India within 3504 million users growing at the rate of 34% in the last five years so it is becoming huge in India.In India where we can buy anything from a mobile phone, charger, Sim card, groceries, to personal care products (Fiore, Kim, & Lee,2007).

The rise of the Internet has moved trade into an electronic age, changing practically every part of the day to day lives, from how shoppers convey and find out about item offerings, to how they shop and purchase items and administrations. Obviously, publicising through the Internet is currently an essential wellspring of purchase data. The Internet is the quickest developing retail channel, with deals volumes about triple that of aggregate retail deals in 2004. Web retail deals are anticipated to reach over $331 billion by 2010. In spite of the current monetary hardship testing shoppers around the world, the expanding selection of the Internet among the overall public seems to extend a brighter future for retail Internet patronization by customers. Purchasers progressively are utilising the Internet to gather e-coupons and make their own particular virtual coupon books, who guarantee that buyers acquire online an assortment of coupons, from shopping for food to theatre exhibitions to lodgings (Kumar, Anand &Mutha,2016)

The continuous growth of electronic commerce constitutes a unique opportunity for companies to replace traditional “brick and mortar” stores with virtual ones and to reach customers more efficiently and in a larger geographical area. The modern train which recalls Wal-Mart in the western and we have big bazaar, food Bazaar, Spencer’s in India which is still very small but growing in e-commerce or a market place is my nude as compared to these two but slowly gaining a lot of traction and it is kind of become an integrated retail outlet place for formulating their distribution strategy, however, the e-commerce place works very different understanding of consumers and how they make their online buying decision (Nalchigar& Weber,2012).

In India Mobile, access over 250 million in that 130 million are the active users from rural area and over 40 million of consumers are online and nearly 20 million people purchase from online. In the year 2013 (Google India and TNS Australia) undertook a study to get a deeper insight into the key drivers of online shopping and saw 128% growth in the internet users in the year 2012-13, which is only 40% in the year 2010-11. The study indicates validating the growth in trends, 9 out of 10 e-commerce buyers intend to spend more on online shopping (Hasan, &Mishra, 2014).

The greater contribution from non-metros a greater number of queries will originate from the mobile phone, now a day’s which become an indispensable tool which has changed the lifestyle of people (Xu, 2005).

Now a day’s customers are more attracted towards foreign brands, those global brands which may not be accessible to the bricks & mortar formats but are becoming more accessible to the e-commerce platforms this is also the consumer base which is a big Smartphone usage almost every second audience in this age group today owns a Smartphone which is becoming one of the major factors towards the promotion of e-commerce in this age group (Park, 2003).

Fiore, Niehm, & Lorenz (2009) has explained that in online, Product assortment is very huge to choose, and make immediate comparison in price, quality, variety, colour and the other two important factors which are affecting Indian market that nobody wants to pay for the shipping of the product but in India is typically a bigger issue, when a consumer sees that they are being made to pay for the shipping it takes to move out of the platform immediately. However, if they have a free shipping option they are basically more ready to take the risk because they’re still in that initial stage of purchase decision where they are learning the platform. And try to assimilate the platform so free shipping becomes very critical and cash on delivery (Goswami, 2015).

In tire 2 and tire 3 towns who don’t have access to debit cards, they cannot make transactions online and cash on delivery, therefore, become a critical challenge for them. No of housewives, students, who want to follow new trends and experiment with global brands are upset because they may not have the credit cards, but they still want to see the products and for them cash on delivery becomes a very good option, also we are very risk averse kind of consumers who like to see a product, touch the product, feel the product, before they really pay for it. Still, many internet customers avoid purchasing online due to privacy and security concern they still hesitation to send personal information through the internet. So, even if they have access to the credit card having online transaction facility, they still hesitant to pay for something which they don’t have in hands. So the cash on delivery and free shipping options become one of the major factors to influence the customer online buying decision (Jusoh&Ling 2012).

Darley, Blankson, &Luethge (2010) conclude that there is a huge gap of research on the impact of online environments on decision making. According to a 2008 report on “Online Shopping” from Pew Internet and American Life Project (a leading non-profit authority on Internet usage trends), almost 80% of customers say that the Internet is the best place to buy items that are hard to find. But at the same time, almost 60% of customer also says that they get irritated, confused, or overwhelmed while searching for the complete product information.

Ha &Stoel (2009) has explained factors influencing customer acceptance of online shopping. The outcome of the study suggests that online quality consists of four dimensions: (1) website design, (2) customer service, (3) privacy/security, and (4) atmospheric/experiential. that explained variance of the first factor, website design (51.51 percent), is greater than the other three factors, accounting for the greatest proportion of variation in overall perceptions of e-shopping quality positive perceptions of e-shopping quality predict consumers' beliefs about ease of use, shopping enjoyment, and trust. The study also reveals technology acceptance behaviour for users within the context of online shopping. The finding that trust and enjoyment perceptions play considerable roles in consumers' adoption of e-shopping supports previous research. In comparing path coefficients of antecedents of attitudetoward shopping, usefulness emerges as the most powerful predictor of attitude toward e-shopping relative to the other belief factors.

Zhou, Dai & Zhang (2007) has conducted a general survey of extant related studies and synthesised their findings into a reference model called OSAM (Online Shopping Acceptance Model) to explain consumer acceptance of online shopping. This study reveals that a countless of factors have been examined in the area of online shopping and mixed results on those factors have been reported. The research also identified highlights a few managerial issues that should be appealing to online retailers. The projected model helps to resolve conflicting findings, discover recent trends in this line of research, and show the new directions to the future research.

The ascent of the Internet has moved trade into an electronic age, changing practically every part of day to day lives, from how shoppers convey and find out about item offerings, to how they shop and purchase items and administrations. Obviously, publicising through the Internet is currently an essential wellspring of purchase data. The Internet is the quickest developing retail channel, with deals volumes about triple that of aggregate retail deals in 2004. Web retail deals are anticipated to reach over $331 billion by 2010. In spite of the current monetary hardship testing shoppers around the world, the expanding selection of the Internet among the overall public seems to extend a brighter future for retail Internet patronization by customers. Purchasers progressively are utilising the Internet to gather e-coupons and make their own particular virtual coupon books, who guarantee that buyers acquire online an assortment of coupons, from shopping for food to theatre exhibitions to lodgings (Swarnakar & Kumar 2016).

Taking fashion to the online market is a dramatic move in this social experience. The absence of helpful staff and lack of touch feel can also challenge this experience particularly that fashion products are heterogeneous in nature. the importance of modern technologies in advancing the online shopping environment for fashion sites and creates them in the more attractive way. Hence, the social dimension of fashion shopping might be met through modern technology. He explained that with regards to fashion shopping, image interactivity, image zooming and 360-degree rotation increase shopping enjoyment and trim down perceived risk toward the online retailer (Nalchigar, & Weber, 2012).

Kim and Lennon (2010) investigated the influence of further product presentation features such as the use of a model (as opposed to flat display) and colour swapping on clothing in addition to image zooming. Because of the inability to try the apparel products before purchase, online product presentation will play an important in the context of online apparel stores”. Fashion behaviour is deeply rooted in emotional and psychological motivations new features implemented on different websites include links to share outfits on social media sites as well as facebook groups and pages where customers have the ability to chat and share thoughts on the particular brand or piece of clothes of interest. Also, some websites started to implement chat with advisor facility which offers the opportunity to speak to an advisor as in offline stores. That can enhance the effectiveness of a Web-based sales channel. That is, having the choice to chat with an advisor may result in a more successful apparel website. Shopper attitude is influenced by visual and verbal information about the product of interest. However, verbal information seems to have the main influence of shopper intention.

Burke, R.R. (2002), Trust is a key component that decides the accomplishment of Business to Consumer (B2C) online business exchanges. Past specialists have distinguished a few basic considerations that impact believes the setting of online shopping. This exploration concentrates on accessible safety efforts which guarantee online customers security and incredible deals advancements and online arrangements which invigorate clients to shop on the web.

The absence of trust in online exchanges has been referred to as the primary explanation behind the severe dislike of web-based shopping. We have tried the intervening part of trust in online exchanges to give observational proof that trust in the online store speaks to the band instrument through which the central free factors of web architecture can emphatically impact buy aim and diminish the apparent hazard. We have additionally shown the directing impact of the person's way of life in online business and in this way offered experiences into the relative significance of web composition variables adding to trust for clients of various social esteems, (Ganguly, 2010).

Marios&Sosa, (2004)revealed that absence of trust in online companies is a major reason why a lot of customers don’t prefer online shopping. This study proposes a model that explains how new customers of an online company build up initial trust in the company after their first online visit. The model is empirically tested using a questionnaire-based field study. The results show that previous company reputation and readiness to modify products and services can significantly affect initial trust. Perceived website usefulness, ease of use, and security control are also a significant experience of initial trust. Finally, they found no support for the hypothesised result of individual customer trust propensity on initial trust.

Trust has been exactly settled as one of the keys ascribes in business to client (B2C) web based business. The impact of measures to manufacture and keep up confides in B2C Online Shopping is liable to client drove conduct variables, which can be controlled by the business firm. The present investigation directed in the Indian setting investigates the part of shopper .self-viability and site social nearness in client & selection of B2C web based shopping intervened by confiding in saw value, and saw hazard. The most critical result of the investigation is that the shopper self-adequacy and site social-nearness influence put stock in, saw helpfulness and saw hazard in the online clients, and thusly emphatically impact the client's goal to buy items on the web(Dash,&Saji, 2007).

Throughout the years the advancement of the Internet as a showcasing medium has turned into a worldwide marvel. The ascent in the quantity of family units having a computer and the simplicity of Internet get to have prompted this far-reaching acknowledgement of web based business. The absence of trust in online exchanges has been referred to, by past researchers, as the primary explanation behind the extreme a version of Internet shopping. In this paper, we proposed a model and gave observational confirmation on the effect of the site attributes on to confide in online exchanges in the Indian setting. In the main stage, we recognised and experimentally confirmed the relative significance of the site figures that create online trust in India. In the following stage, we have tried the arbiter impact of trust in the connection between the site variables and buy the goal (and saw chance). The present examination interestingly gave exact proof on the intervening part of trust in web-based shopping among Indian clients (Ganguly, 2010).

Abel Stephen (2003) in his paper speaks to the discoveries of research considers that address internet business outline and related customer conduct. The development of internet business has influenced not just the commercial centre through the help of the trading of products and enterprises, additionally human conduct in light of the instruments of online administrations. Specialists have distinguished and guessed on applicable topics going from Web ease of use, promoting stations and different elements affecting web based purchasing conduct. In spite of the fact that scientists have concentrated on what seem diverse parts of internet purchasing conduct, their examinations might be appeared to be interrelated and associated, even to the degree of uncovering develops whereupon web based business, as far as future outline and research, could be constructed.

Subramanian, & Konan (2003), explained some conventional administration quality measurements that decide consumer loyalty, for example, the physical appearance of offices, workers, and hardware, and representative’s responsiveness and sympathy are inconspicuous. Interestingly, a trust may assume a focal part here in upgrading consumer loyalty. Show trust as an endogenously shaped element that at last effects consumer loyalty, and we clarify the linkages amongst trust and different elements identified with the execution of the online specialist organisation and to the administration condition.

Customer contributions in internet purchase have turned into a very important pattern. Thusly, it is essential to recognise the customer online purchase intention. The aim of the study is to measure the effects of shopping orientation, online trust and earlier online shopping experience and understand the customer online purchase intention. a study of 242 undergraduate students from a private college in Malaysia taken for this research The study revealed that impulse purchase intention, quality orientation, brand orientation, online trust and prior online purchase experience were completely related to the customer online purchase intention (Chai, Ling, &Piew,2010)

Kamineni, (2004) in his examination finds that World Wide Web can change human conduct and human connections to an expensive degree. Online shopping conduct is one noteworthy case to bring up the patterns toward this path. This examination is of an exceptionally exploratory nature and it expects to build up the contrasts between a few online customers from various parts of the world. A few basic components related to web based shopping conduct have been investigated. A multifaceted informational index has been gathered and an illustrative portrayal of the customers has been given. As the last stride, the culturally diverse contrasts between a few customers investigated.

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^[1] http://bestmediainfo.com/2013/01/online-shopping-set-for-exponential-growth-in-2013-google-india/( accessed on 1st July 2017)

^[2] http://www.internetworldstats.com/stats.htm( accessed on 1st July 2017)

^[3] http://www.assocham.org/newsdetail.php?id=5427(accessed on 1st July 2017)