Impact of Demonetization on Consumer's Buying Behaviour towards Online Shopping

Impact of Demonetization on Consumer's Buying Behaviour

towards Online Shopping
Dr. Srishti Agarwala
a ITM Business School, Mumbai

ARTICLEINFO ABSTRACT
Keywords: After boldest step taken by the Modi’s government in
Demonetization, the form of Demonetization, study examined its impact
Buying behaviour, on the people’s buying behaviour towards online
online shopping, shopping. The study results as the initial sharp decline
consumer in cash on delivery purchases, gradually it forced the
people to opt for online shopping through e-payment
mode and recognize the customers view towards
online purchases and the effect of demonetization on
behaviour of purchaser i.e. how the general populace
who have never utilized ATM, PAYTM, web-based
shopping etc has progressed toward becoming
digitalized. With the analysis of secondary data, the
fundamental focal point of the investigation is to
understand and analyze the effect of demonetization
on consumer's frequency of purchasing item and
consumer's mode of payment for online shopping post
demonetization.

Introduction
Electronic commerce, ordinarily written as e-commerce or ecommerce, is the
exchanging or help of exchanging items or services utilizing computer networks, for
example, the internet or online interpersonal organizations Electronic commerce
draws on technologies, for example, mobile commerce, electronic supports/fund
transfer, production network management, internet marketing, online exchange
processing, electronic information interchange (EDI), inventory management system
and automated information collection systems. Modern electronic commerce
commonly uses the World Wide Web for no less than one a player in the exchange's
life cycle despite the fact that it might likewise use other technologies, for example, e-
mail.
E-commerce businesses may employ some or the majority of the accompanying:
 Online shopping web sites for retail sales direct to consumers
 Providing or taking part in online market places, which process outsider
business-to-consumer or consumer-to-consumer sales
 Business to business purchasing and selling
 Gathering and utilizing demographic information through web contacts and
online networking
 Business-to-business (B2B) electronic information interchange
 Marketing to prospective and established customers by e-mail or fax (for
example, with newsletters)
 Engaging in preparation for propelling new items and services
 Online monetary exchanges for currency exchanges or exchanging purposes
This is correct that 100% cashless society is never possible in a nation like India
however people can make the begin with less-cash society, after this begin, the dream
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Impact of Demonetization on Consumer's Buying Behaviour towards Online Shopping

of a cashless society won't be a far away destination. Numerous young people are
enjoying the process of teaching people and families how to conduct cashless
transactions through mobile applications, mobile keeping money and debit/credit
cards. In any case, with this, there are numerous problems which are to be tackled
and it would take time to get emerge out of its effect. This great move has been taken
for some essential purposes, for example, to reduce untaxed dark money, to reduce
the wild corruption, to encourage cashless transactions etc. This move will definitely
realize a whole measure of transition to no cash or low cash sort of transactions.
India is one of the key development countries for the companies, with a huge
potential for development in e-commerce. The cash crunch may expedite the cash
delivery sales down altogether of e-commerce and increase the online payments.
For e-commerce companies, for example, Amazon, Flipkart, Jabong.com, Snapdeal
etc. already have an advanced payment system, pointers to higher online payment
which ultimately eliminates the troublesome cash on delivery options and there are
e-wallets like paytm, oxizen, freecharge, mobikwik and plastic money (debit cards
and credit cards) etc. for the advanced transaction system. In any case, with these
positive things, there are numerous problems that the people are looking amid this
cash crunch move. There are many misusing on the piece of the Banks and outsider
who manage the ATMs. There is a shortage of liquidity whether it is a bank or other
people.
Impact of Demonetisation on E-Commerce:
Demonetization has the short and in addition long term effect in terms of the trend
of online transactions. For the time being, because of this cash crunch/liquidity
crunch, people are not able to meet their day by day expenses and this is creating a
major problem for the lower income people/day by day wage earners, little traders
and producers yet in the long term it is beneficial to the whole economy. These
benefits are as per the following:
 Numerous people will move to keeping money including Jan Dhan, post office
and mobile managing an account.
 Reduction in operational expenses of government and increasing profitability.
 Bringing more awareness regarding online transactions.
Hence, over the long haul it is very beneficial to the individual, society and
additionally to the economy as a whole. The reasons why there is a generous
increase/decrease in computerized transaction system. There are different reasons of
a significant increase in the advanced transaction system.
 Reducing the volume of cash transactions is the best method to eradicate dark
money.
 There is a consistent initiative to educate the gathering of people towards
usage of online transactions.
 Different new and innovative ideas are being developed to draw attention in
customers. Eg. my mobile, my bank, my wallet, Use mobile payment
application for cashless transactions anytime and anywhere.

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Impact of Demonetization on Consumer's Buying Behaviour towards Online Shopping

Source: Internet
From the above figure we can see that demonetization has negatively affected the E-
commerce Industry and resulted in moderate development for some period of time.
It has led to the accompanying consequences:
 Undelivered Orders: A COD order is the one where in your place an order
online and agrees to pay on the spot when delivered at your doorstep. Be that
as it may, due to the end on the usage of notes, this errand couldn't be
completed. Hence, there had been a sudden decrease in the measure of
purchases done online, turned out to be a negative effect and a critical
misfortune for E-commerce businesses like Amazon, Flipkart, Snapdeal et
cetera. The vast majority of the orders that were placed with the cash on
delivery option couldn't be delivered because the online retailers couldn't
accept old notes. Every one of the overheads and the expenses incurred in
transportation the orders go a waste in case of undelivered orders. This is
indeed a huge misfortune for the E-commerce players.
 Reduction in the number of orders: From the survey by different business
insiders, 83 % of consumers in India settle for COD option. As a result of
demonetization, it detrimentally affected the number of orders placed online
as most consumers did not wish to settle for online transaction. As a
noteworthy piece of orders placed on the online sites is paid with cash on
delivery, demonetization detrimentally affected the number of orders placed.
People only needed to hold up to get their old currencies to be exchanged and
few of the customers are sceptical about online payments. This lead to a
notable surge in the number of orders placed on the online shopping sites.
 Expansion of Payment options: Credit and debit cards are the existing options
for online payments; however the additional option to fix this void would be
the online wallet service: for example: the Amazon pay balance usage for
purchase. This option made the consumers feel significantly more comfortable
amid online transactions. Online payments are speedy, hassle free and time
sparing. What's more, EMIs are the best part about online payments. This
abstains from causing a money related strain when you make a large value
purchase. Know that it is so easy to get moment credits for all your appliance,
furniture and gadget purchases. So don't let the restriction on currency notes
of higher denominations prevent you from purchasing everything that you
wanted. Unified Payments Interface (UPI) will see a steady development. The
help of the government has likewise been supportive of advancing UPI for
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Impact of Demonetization on Consumer's Buying Behaviour towards Online Shopping

online payments. Banks like ICICI have introduced debit card EMI option for
mobile and other purchases. This can likewise benefit customers making
online purchases without a credit card. Imagine being to purchase all top of
the line PDAs and PC on EMI even without owning a credit card.
 Go cashless to make payments: To encourage customers on the usage of
online payment office, retailers additionally began to provide offers and
rebates specifically to those consumers who decided to go for cashless
payment. Subsequently, it helped in drawing in customers back to E-
commerce websites. Online retailers likewise have introduced impressive
rebates for all the cashless payments. This encourages more customers to
choose a payment method other than COD and claim their rebates and thus
helping the E-commerce businesses retain a reasonable cash stream.

Literature Review
Different scientists have talked about web managing an account idea in following
way characterized Internet saving money as the utilization of Internet as a
conveyance channel for saving money administrations which incorporate opening a
store account, exchanging reserves, electronic bill presentment and instalment. Web
saving money is an incorporated framework that gives their clients an adaptable,
advantageous and reasonable stage with coordinated administrations including on
the web bank adjust checking and investment accounts, currency advertise accounts,
declarations of store, Master cards, home value advances, home loan, protection,
venture administrations, portfolio administration, and other related monetary
administrations (Bhattacherjee, 2001).
As per Siu and Mou (2005) the web (electronic) keeping money is conspicuous case
of data innovation in the administration business; it is advantageous and efficient in
contrast with conventional managing an account. In customary retail keeping money,
one needs to visit branch to lead managing an account movement like cash exchange,
to issue check book, DD and so forth yet with the utilization of web in saving money,
client can direct these exercises from any piece of the globe, and it requires web
association and PC as it were. Aside from these exercises client can buy/offer, pay
bills and so on from any advantageous place.
Daniel (1999) additionally learned about e-managing an account and he portrayed
electronic saving money as the conveyance of banks data and administrations by
banks to clients by means of various conveyance stages that can be utilized with
various terminal gadgets, for example, PC and cell phone with program or work area
programming, phone or advanced TV.
Further, Zeithaml et. al, (2002) expressed about web keeping money as a wonder
where clients can get to their financial balance by means of the web utilizing a PC or
cell phone and internet browser. It has not just made open doors for organizations to
connect with purchasers straightforwardly yet in addition permits shoppers a prompt
access to the electronic markets (Gupta and Bansal, 2012). This outcome in
development in the web managing account clients, all banks i.e. private, open and
outside banks are giving this office to their client. The web has turned into another
stage for electronic exchange all through the world, and it has altered the manner in
which customers purchase merchandise and enterprises.

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Impact of Demonetization on Consumer's Buying Behaviour towards Online Shopping

As indicated by an investigation led by Karayanni (2003), web customers tend to

profit by web based shopping in three different ways and Benefits from plausibility of
shopping on a 24-hour premise, time proficiency and the shirking of lines in shops.
In any case, the examination done by a few specialists features that individuals tend
to peruse and surf the web more to get data and not for shopping. Hoffman et al.
(1999), featured in his examination that there is a crucial absence of trust between
most organizations and buyers on the web. This go about as a noteworthy motivation
behind why individuals don't have a tendency to give data to web suppliers and
online vendors in return for access to data and furthermore don't like to shop on the
web.
India is one of the key development nations with regards to web based business yet it
is still at an incipient stage and has a gigantic potential for development. The Indian
Government's sudden and phenomenal proceed onward November 8, 2016 to
remove high-esteem money notes from flow sent the Indian economy worked up.
Demonetization implied that Rs 500 and Rs 1,000 are currently no longer lawful
delicate, wiping out about 86 for each penny of the money available for use, making
an enormous trade smash out the economy. The impacts of this move have been seen
at a person and also at an industry level. For web based shopping in India also, the
effect has been major. Recorded are some feasible impacts of demonetization on web
based shopping in 2017: (1) The Rise and fall of COD (Cash-on-Delivery) (2) Cashless
Becomes the New Norm – Mobile Wallets Reign and so forth.
It has been discovered that pre demonetization the recurrence of shopping through
retail shop was 48% and shopper used to purchase less items through web based
shopping. Post demonetization recurrence of web based shopping has expanded
radically from 27 % to 53%. Pre demonetization shopper used to receive money down
choice to make instalment for purchasing items through online.43% of the
respondents used to embrace COD office. Post demonetization COD choice for
making instalment has diminished to 2% and purchasers began utilizing check card
more to make instalment. Utilization of charge card has expanded from 14% to 43%
post decentralization.
Research Objective
 To identify the impact of demonetization on online buys.
 To analyze the significance of digital literacy for consumer to make cashless
payment/ digital payment.
 To identify the impact of demonetization towards method of instalment
utilized by the clients.
Findings
Demonetization is the appearing of stripping a money unit of its status as legal
fragile. Demonetization is fundamental at whatever point there is a difference in
national money. The old unit of cash must be surrendered and supplanted with
another money unit. India is one of the key advancement countries with respect to
online business, yet it is still at a beginning stage and has an enormous potential for
improvement. The Indian Government's sudden and uncommon continue ahead
November 8, 2016 to expel high-regard money notes from spread sent the Indian
economy worked up. Demonetization implied that Rs 500 and Rs 1,000 are currently
never again legitimate delicate, taking out very nearly 86 for every penny of the

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Impact of Demonetization on Consumer's Buying Behaviour towards Online Shopping

money available for use, making an immense trade crush out the economy. The
effects of this move have been seen at a man and furthermore at an industry level as:
There are different changes happening in E-commerce business and these are
classified as long term and here and now effects. Soon after currency banned in India
E-commerce business were looking with a sudden fall yet it brings some fiery positive
changes too which can be keep going for long time, these are: It causes break on cash
on delivery payment.
 Many E-commerce marketers stop cash on delivery payment this gets a
sudden falls marketing because a large portion of the people still have trust
issues for online payment. Marketers quit accepting old currency of INR500
and INR1000 soon after demonetisation which results in tremendous number
of deliveries returns for Cash on delivery order. This trend emphasizes on
payment through advanced mode. Shortage of cash forced people to use
online payment mode or E-wallet.
 Special offers are being given on online payments. It leads to increment in
delivery returns because of absence of cash. A large portion of the user after
COD delivery said to take old currency otherwise asked to return the delivery.
This led to numerous orders getting cancelled and consequently results in
heavy misfortune to marketers.
 E-commerce going towards offering heavy rebates and drive sale offers to
increase sale by online payment. They likewise put rebates by means of online
or card payment to increase engagement of users in selling and acquiring.
Sudden increment being used of online wallet likes Mobikwik, pay money,
Paytm, etc. Increase user activity on even little website, like: huge basket,
grofers, etc., because these are accepting cards and online payment and
shortage of cash forced people towards these online stores. Increase in
application download and their use because it gives a stage for better
experience of marketing with special rebates and offers. It provides an easiest
method to track order with keep payment details safe for further use also.
Every business man is looking towards E-commerce instead of commerce
business because of demonetization. Since people are moving towards
advanced payment and computerized marketing so businessman is likewise
pushing forward appropriately.
To tackle the after-effects of demonetization, E-commerce stages have added credit
card on delivery as one of the payment options to put customers coming up short on
cash at some ease. Websites like Snapdeal and Flipkart have additionally been
offering more rebates on online payments and zero cost EMI schemes. It will result
in higher Gross domestic product, transparency and integrity in the system, provide
security to work, employments for the young, cheaper credits to promote
entrepreneurship and innovation, bolster farmers to double their income, provide
affordable lodging for all and higher revenues to the Government which can spend it
on poor people and marginalized sections of society. In particular, it has expedited a
smile the face of every honest Indian.

Conclusion
In the nation like India which is a cash prevailing nation, when suddenly a huge
transformation comes to change a cash transaction confronting a reduction, into a
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Impact of Demonetization on Consumer's Buying Behaviour towards Online Shopping

cashless transaction, for example, online transactions and other modes of payments.
In this examination, it is concluded that there is a surge in demand of online and
other alternative modes of payments amid demonetization because of great shortage
of liquidity in banks, ATMs and in addition in the hands of the people. Numerous
banks are additionally advancing and propelling the applications for the easy online
transactions like state bank of India has launched UBI application for mobile
managing an account, paytm, free charge another mobile application have seen a
tremendous hike in the online payment system. Customers are utilizing e-commerce
or electronic payments at delivery and this has been seen as ten times more.
development.

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