CUSTOMERS RESPONSE TOWARDS ONLINE SHOPPING

(A Study in Birendranagar, Surkhet)

A Project Proposal

By

Bibek Khatri

T.U. Regd. No.: 7-2-1094-0014-2016

Symbol No. : 10940010

Siddhapaila Campus

Submitted To

The Faculty of Management

Tribhuvan University

Kathmandu

In Partial Fulfillment of the Requirements for the

Bachelor's Degree in Business Studies (BBS)

Siddhapaila Campus

Birendranagar

2020
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1. Introduction

Generally speaking the trend of e-commerce has been increased rapidly in the recent years with
the development of internet and due to the easy accessibility of internet usage. Easy access to
internet has driven consumers to shop online in fact according to the University of California,
Los Angeles (UCLA) communication policy (2001), online shopping is third most popular
activity on the internet after email using and web browsing. Globally more than 627 million
people have done online shopping so far, World’s biggest online shoppers include Germans and
British. Books, airline tickets/reservations, clothing/shoes videos/games and other electronic
products are the most popular items purchased on the internet. (ACNielsen Report on Global
Consumer Attitudes towards Online Shopping, 2007).

Through electronic marketing and internet communication business firms are coordinating
different marketing activities such as market research, product development, inform customers
about product features, promotion, customer services, customer feedback and so on. Online
shopping is used as a medium for communication and electronic commerce, it is to increase or
improve in value, quality and attractiveness of delivering customer benefits and better
satisfaction, that is why online shopping is more convenience and day by day increasing its
popularity.

Not only benefits but also risk is associated with online shopping. Generally speaking internet
users avert online shopping because of credit-card fraud, lack of privacy, non-delivery risk, lack
of guarantee of quality of goods and services. Concerned authorities are devising policies to
minimize the risk involved in e-business.

In Liao and Cheung (2000) words:”Fraud- free electronic shopping” was introduced by UK in
the early 1995 and after two years Europe and Singapore introduced secured electronic
transaction (SET).

On the other hand E- commerce has been grown very fast because of many advantages
associated with buying on internet because of lower transaction and search cost as compared to
other types of shopping. Through online shopping consumers can buy faster, more alternatives
and can order product and services with comparative lowest price. (Cuneyt and Gautam 2004).
Therefore Marketers have carefully analyzed the consumers’ attitude and behavior towards the
online shopping and spend billions of dollars to facilitate all the demographics of online
shoppers.

Consumer’s attitude towards online shopping refers to their psychological state in terms of
making purchases over the Internet. Online buying behavior process refers to the products
purchased online. The process of online buying behavior consists of five steps and it is similar to
traditional shopping behavior (Liang and Lai 2000). For instance, consumer recognize the need
for buying some product (book), they refers to the internet to buy online and start to search for
the information and look for all the alternatives and finally make a purchase which best fits to
their needs. Before making final purchase consumers are bombarded by several factors which
limits or influence consumers for the final decision.

The main theme of the study is to know the factors that influence the consumer’s attitudes and
behaviors towards online shopping. Researchers will also focus on how consumers form such
attitudes with the help of models and who are truly the online shoppers. According to the online
survey within few American students, Case, Burns, and Dick, (2001, p.873) concluded that
“Internet knowledge, income, and education level are especially powerful predictors of Internet
purchases among university Students”.

Our problem area that is Consumers attitude towards online shopping will determine the
attractive factors that influence consumers to shop online and those factors will help marketers
to formulate their strategies towards online marketing respectively. As our area of research will
be on Sweden and specifically on Gotland so our research thesis will not only be helpful for the
marketers in general but specifically will be helpful for the marketers in Sweden. Researchers
will precede this work with primary data which will help them in covering the subject area in
more diversified way.

1.2 Statement of the problem

“An increasing number and variety of firms and organizations are exploiting and creating
business opportunities on the Internet”, Liao and Cheung (2000:299). Above mention statistics
indicate the rapid growth in the field of virtual shopping. With this emerging field of shopping
the interest of marketers is also increasing in studying what actually motivates consumers to
shop online. Fierce competitions among online sellers have forced them to gain the competitive
edge in the field of virtual shopping. In order to gain competitive edge in the market, marketers
need to know the consumer behavior in the field of online shopping. So it is important to

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analyze and identify the factors which influence consumers to shop online in order to capture the
demands of consumers.

Other than the factors which influence consumers to shop online, online shopper’s demography
in terms of Age, gender, income and education is equally important to define their strategies
accordingly.As online shopping is a new medium so the consumer behavior in the field of online
shopping is also pretty diverse in nature compare to traditional consumer behavior, so it is
equally important for one to identify what factors influence consumers to shop online. In order
to reach towards purchase decision, it consists of several factors which influence consumers to
shop online. These factors are important for retailers to compete in the market and to make their
product more compatible.

1.3 Objective

The prime objective of the research is to identify and analyze the factors influencing consumers
to shop online. Besides the factors influencing another purpose of the study is to analyze who
are online shoppers in terms of demography. The findings of this research will not only help
Nepalese marketers to formulate their marketing strategies for online shoppers but will also
increase the knowledge and research in field of online shopping.

1. To analyze the factors influence consumers to shop online.

2. To analyze the satisfaction of customers towards online shopping.

1.4 Rationale

Online shopping is an emerging trend in the urban areas of Nepal. The major preference to do
online shopping shows that ‘service quality’ positively correlated and negatively correlated with
‘time-saving’. At the same time, negatively correlation was seen between the service expected
from the online shoppers and the ‘product delivery’ from the online shopping companies, which
shows there is still need for the improvement of the service quality from the side of the online
shopping companies. Another issue that should be addressed as soon as possible to flourish the
online shopping in Nepal is the smooth payment system. As the correlation with the expected
service and the ‘payment security’ was seen negatively correlated, the Nepalese shoppers are not
confident in getting a better option than cash-on-delivery (COD) in online shopping of Nepal.
Though few companies have gone forward for the digital, or electronic payment, still the
shoppers are not so seen ready for shifting to electronic payment, as ‘product delivery’ from the
online shopping companies at the time is seen a major issue. Various studies revealed that
Nepalese online shoppers preferred online shopping to save time, followed by the service quality
delivered by the online shopping company. Shopping fun is seen as the least priority while
preferring for online shopping among the Nepalese online shoppers. At the same time, the offers
provided by the online shopping companies, and an easy ordering system are also seen as the
factors to prefer online shopping. Still, there is a need for the herculean task to be done by the
Nepalese online shopping company, as the quality of the products displayed and what delivered
to the consumers have been the major problem. The relations between the preference to shop
online and time-saving, as well as the relation with the preference to information availability are
not seen positive.

In conclusion, this study will help the entire related field like distributor, retailers as well as
consumers. The study aim is to find out the proper attitude regarding the brand and the effect of
the promotional activities for the brand.

2. Literature Review

This section reviews the previous studies done in the area of online shopping following
consumers attitude towards online shopping and highlighting the two main research questions as
i) Factors affecting and influencing consumers to shop online and ii) Who are online shoppers in
terms of demography.

Online shopping is basically a process of selling and buying of goods and services on World
Wide Web. As (Forsythe and Shi, 2003) explains” Internet shopping has become the fastest-
growing use of the Internet; most online consumers, however, use information gathered online
to make purchases off-line”.

According to a report (ACNielsen Report on Global Consumer Attitudes towards Online

Shopping, 2005) published on www.acnielsen.com, one tenth of the world population is
shopping online , till October 2005, 627 million people have done online shopping , and

according to the same report Germans and British are on the top of the list on Online Shopping.
Additionally report (ACNielsen Report on Global Consumer Attitudes towards Online
Shopping, 2005) published on www.acnielsen.com confirms that Products most purchased
online are Books on the top followed by DVD/Video/Games and Plane Reservations, the
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payment method that is being used mostly is Credit Card.

As above stats confirms internet activity as growing fast and Sweden has always been on high
heels in Internet Usage and online Shopping in Europe. According to a report on (ACNielsen
Report on Global Consumer Attitudes towards Online Shopping, 2005) shows on the list of top
20 internet purchaser countries Sweden is on number nine following Japan and USA.

As Forsythe and Shi (2003) mention internet users can be categorized in to two Internet
Shoppers and Internet Browsers, Internet shoppers are the people who shop online whereas
internet browsers are the people who just browse the internet other than shopping purpose.

Though there are several factors that influence consumers to shop online, but as mentioned
above researchers have selected four factors after reading literature in the field on consumer
attitudes towards online shopping and these factors are discussed below in the light of previous
literature.

Convenience factor refers that it is easy to browse or search the information through online is
easier than the traditional retail shopping. Through online, consumers can easily search product
catalog but if the consumer look generally for the same product or item in a traditional store
manually it is difficult to visit physically and time consuming also. Convenience has always
been a prime factor for consumers to shop online. Darian (1987) mention that online shoppers
carry multiple benefits in terms of convenience, such as less time consuming, flexibility, very
less physical effort etc. Bhatnagar and Ghose (2004) claims for convenience as one of the most
important advantage for online shopping. According to the Robinson, Riley, Rettie and Wilsonz
(2007) the major motivation for online purchasing is convince in terms of shop at any time and
having bundles of items delivered at door step.

Rohm and Swaminathan’s (2004) claims in “typology of online shoppers into”: Convenience
shoppers, balanced buyers, variety seekers and store-oriented shoppers, based upon their preset
shopping motivation. Rohm and Swaminathan’s (2004) findings about ’convenience and variety
seeking’ are major motivating factors of online shopping and this study is consistent with
Morganosky and Cude’s (2000) research findings. Webcheck’s (1999) study shows that
convenience factor is one of the biggest advantages of online shopping. Through online
purchase consumers can easily compare the price than the traditional purchase. So price
comparison is also another convenience factor of online shopping.
Time savings is one of most influencing factors of online shopping. Browse or search an online
catalogue can save time and patience. People can save time and can reduce effort by shopping
online. According to Rohm and Swaminathan’s (2004), one possible explanation that online
shopping saves time during the purchasing of goods and it can eliminate the traveling time
required to go to the traditional store. On the other side, some respondent think that it is also
time taken for delivery of goods or services over online shopping.

Unexpectedly time saving is not the motivating factor for the consumers to shop online (Corbett,
2001) because it takes time receiving goods or delivery. But time saving factor can be seen
through different dimensions i.e. “person living in Florida can shop at Harod’s in London
(through the web) in less time than it takes to visit the local Burdines department store” (Alba et
al. 1997, p. 41,emphasis added). Morganosky and Cude (2000) have concluded that time saving
factor was reported to be primary reason among those consumers who have already experienced
the online grocery buying. So the importance of the time saving factor cannot be neglected as
motivation behind online purchasing. Additionally Goldsmith and Bridges (2000) emphasize
that there is a discrimination between online shopper and non online shoppers, online shoppers
are more worried about convenience, time saving and selection whereas non online shoppers are
worried about security, privacy and on time delivery. A study by Kamariah and Salwani (2005)
shows higher website quality can highly influence customers to shop online.

Website design and online shopping activity is one of the vital influencing factors of online
shopping. Website design, website reliability/fulfillment, website customer service and website
security/privacy are the most attractive features which influence the perception of the consumer
of online buying Shergill & Chen (2005). Kamariah and Salwani (2005) claims the higher
website quality, the higher consumer intends to shop from internet. Web design quality has
important impacts on consumer choice of electronic stores, stated by Liang and Lai (2000).
Website design one of the important factor motivating consumers for online shopping. Almost
100,000 on-line shopper’s surveyed by (Reibstein, 2000) shows that web site design was rated
as important factor for online shopping. Another study conducted by Zhang, Dran, Small, and
Barcellos (1999, 2000), and Zhang and Dran (2000) indicated that website design features of the
website are important and influencing factors that leads consumer’s satisfaction and
dissatisfaction with a specific website.

A study conducted by Yasmin and Nik (2010) shows a significant relationship between online

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shopping activity and website features. Website design features can be considered as a
motivational factor that can create positive or negative feelings with a website (Zhang, et al
1999). A study by Li and Zhang (2002), if website is designed with quality features it can guide
the customers for successful transactions and attract the customers to revisit the website again.
However, worse quality website features can also hamper online shopping. According to Liang
and Lai (2000), web design quality or website features has direct impact on user to shop online.

Moreover researchers such as Belanger, Hiller and Smith (2002) concluded that a large segment
of internet users have serious concerns of security. Security is another dominant factor which
affects consumers to shop online. However many internet users avoid online shopping because
of credit card fraud, privacy factors, non delivery risk, post purchase service and so on. But
transaction security on the online shopping has received attention. Safe and secured transaction
of money and credit card information increases trust and decreases transaction risk. In 1995, UK
has introduced Fraud free electronic shopping and later on Europe and Singapore introduced
secured electronic transaction (SET). According to Bhatnagar and Ghose (2004) Security is one
of the attribute which limits buying on the web as they claim that there is a large segment of
internet shoppers who don’t like to buy online because of their thinking about the security of
their sensitive information.

Cuneyt and Gautam (2004) claims trust in the internet shopping with advanced technology, and
frequent online shopping to the internet being secured as a trustworthy shopping channel. Online
shoppers in terms of demography are another important aspect. We would like to study
demography in terms of age, gender, income and education as are there any differences while
consumers shop online, differences within the age groups such as does online shopping attracts
elder people or younger people. Studies have shown that online shoppers mainly consist of
people with Higher education and income and working in middle to senior management or
professionals (Kehoe et al., 1998; Hoffman et al., 1996). Locally, a report in the Business Times
and an online survey showed that demographically, a typical Net shopper is mainly male, aged
between 18 and 40, had attended at least secondary school and belongs to a family with average
income of at least $5000. The online survey also showed that cyber- buyers were also mainly
Chinese below 36 years old with diplomas or degrees and drawing a monthly salary of less than
$3500. Another study by Miller (1996) claims cyberspace is the domain of young people
Bhatnagar and Ghose (2004). Sim and Koi, (2002) states as main discriminating factors
appeared to be gender and income. Customer segmentation is important for electronic commerce
success, Berry (1999). Miller (1996) has focused on demographics to show the profile of
Internet users, Bhatnagar and Ghose (2004).

3. Methodology

3.1 Research method

Research methodology is a way to systematically solve the research problem. It is an art of

scientific inquiry. It generates new knowledge and concepts systematic, controlled, empirical
and critical investigation of hypothetical propositions about the presumed relations among
natural phenomena. It is a systematic careful inquiry or investigation done to discover new
information or relationship and to expand verify existing knowledge for some specific purpose.
“Research methodology is an organized systematic data based critical scientific inquiry or
investigation into specific problem undertaken with the objective of finding answer or solution
it," (SekaranV.1992)

The objective of this study is to examine the customer response towards online shopping in
Birendranagar municipality, ward no 6. In this competitive modern business world research on
consumer behavior is consider as most essential activity to be carried on to become a successful
marketer. In this study, the necessary and relevant data have been collected from the sample
customers. To achieve this objective, the study follows a research methodology, which has been
described as the following.

3.2 Research Design

A plan of study or blue print for study that presents a series of guide posts to enable the
researcher to progress in the right direction in order to achieve the goal is called a research
design or strategy.

After exploring the sources of information about different aspects of marketing of online
shopping, primary information were generated through interview with consumers who use
online shopping experience This research is conducted under qualitative research design. A set
of questionnaire have been administered in order to generate data and other information related
to the study. Collected data are analyzed through descriptive as well analytical research tools
and techniques.

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3.3 Population and Sample

As the total population of online shopping users is hard to find in number the study takes the
population as the total consumer of online shopping in Birendranagar municipality. This study
included 50 respondents using purposive sampling method, based in Birendranagar
municipality, ward no 6. Though the sample size is very small in comparison to the total
population, sufficient efforts have been made to make the sample representative by including
consumers from the different professions, age group, and sex.

3.3 Nature and Sources of data

The data used in this study are mainly primary in nature, which are collected directly from the
respondents. The respondents for this study are online shoppers in Birendranagar municipality,
ward no 6. The questionnaires were distributed to the 50 respondents of Birendranagar
municipality for collecting necessary information. The questionnaire used in this study is
presented in the Appendix 1.

The data collected are through the questionnaire, from where we can get accurate and specific
data in which the study is focused. Apart from it, some relevant secondary data are also used for
the study.

3.4 Data collection

The data have been collected through the field survey of Birendranagar municipality. A set of
questionnaire was developed for the purpose of collecting data from the respondents. The
questionnaires were served through personal contact in which the respondents were requested to
fill up. The researcher personally visited to take response of the consumers who were chosen
from different professions, age group, education background and sex. The closed questionnaire
includes objective questions. A few additional questions were asked for snooping.

3.5 Data processing, Tabulation and Analysis

The raw data collected through the questionnaire are thoroughly checked, compiled and
presented in appropriate to facilitate analysis and interpretation. There are many analytical tools
to analyze the data. In this research, researcher used MS-Excel to tabulate the collected data and
presented it in different statistical tools like bar diagrams, percentage and pie-chart that have

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been used to make the information easy and understandable.

3.6 Limitations

This study has taken under partially fulfillment of requirement of Bachelor's Degree in Business
Studies. It aims to find out customer response towards online shopping in only Surkhet valley.
This survey is conducted by considering the time constraint. Sample size of 50 respondents may
not be adequate. It is difficult to be precise about the most appropriate sample size for
conducting such research. Due to subjectivity and beliefs of consumers, some answers of the
questionnaire may differ from the reality. Also due to lack of available literature on customer
preference of online shopping and lack of cooperation from the respondents affect the validity of
the data.

In spite of fulfillment of objective, this study has the following limitations, which are as follow:

a.This study is limited inside certain areas of Birendranagar municipality. So it may not
represent overall consumers’ view of the entire city.

b. Only customers having experience of online shopping experience are selected for the
study.

c.Sample size is limited (within 50 respondents representing consumers only)

d. Most of data used is these studies have been obtained through closed questionnaire
interviews, so most of data are primary based on sample survey.