UPASANA KANCHAN et al.

: A STUDY OF ONLINE PURCHASE BEHAVIOUR OF CUSTOMERS IN INDIA

DOI: 10.21917/ijms.2015.0019

A STUDY OF ONLINE PURCHASE BEHAVIOUR OF CUSTOMERS IN INDIA

Upasana Kanchan1, Naveen Kumar2 and Abhishek Gupta3
1,2
School of Management, Gautam Buddha University, India
E-mail: 1Kanchan_upasana@yahoo.com, 2nksurya2002@gmail.com
3
Faculty of Management, Shri Ram Murti Smarak College of Engineering and Technology, India
E-mail: 2007abhis@gmail.com

Abstract Number of users accessing the web through mobile devices

The recent growth of e-commerce and the consumer’s increasing has almost doubled every year since 2009.
interest in purchasing over the net have significantly changed the The size of e-commerce market in India is worth around Rs
landscape of Indian retail market. Today customers are inclined to 9,500 crore, out of which the pure play online shopping market
accept the changes and keep their eyes on the benefits they can obtain is worth Rs 1,300 crores. While online shopping globally is
from online retailers. The recent example of changing consumer growing at around 8-10%, in India the growth rate is upwards of
purchase pattern is the flipkart’s ‘Big Billion day’ Sale. The growth in 30%. [7].
online sales can be partially attributed to the Internet’s advantages of
providing large amounts of information quickly and inexpensively Indian direct-to-customer e-commerce market is likely to
and its growing accessibility. Yet, to reach its full potential, business double in size to more than $3 billion within three years, and
owners who use ecommerce as a distribution channel need a clearer could grow to reach $15 billion by 2017 as said by Avnish Bajaj,
understanding of who buys online, what they buy online, why they co-founder and director of Matrix Partners India.
buy online, and how the non-Internet buyer can be transformed into
an online buyer in order to increase online sale. India’s online customer base of around 20 million shoppers
could increase as much as 1400% and reach 300 million
The purpose of this study is to understand and analyze the factors
shoppers within 10 years.
effecting online purchase decisions of Indian customer. The paper
attempts to identify the determinants of online purchase intentions of Social media activity is a strong indicator of how much
youths in Indian context. Based on extensive literature review, factors shoppers will buy, both online and in stores. There are 62.7
effecting online purchase intentions, antecedents of service quality and million Facebook users in India, representing 68% of the
consumer attitudes were identified and a structured-non-disguised country’s online population, according to Socialbakers, which
questionnaire was prepared. The data was collected through survey of tracks activity on social networks.
200 students of graduation and post-graduation courses in Bareilly
region of Uttar Pradesh. The questionnaire contained questions about Although the country recently has 150 million internet users,
consumer demographics, security and privacy concerns, technological but only approximately 10 million users transact online (7% of
familiarity, past online shopping experiences and intentions to buy online users). This shows that e-commerce industry is still in its
various types of products through internet in future. nascent stage in India. Though online shopping is very common
The findings of the study indicate that customer online purchase outside India, its growth in Indian market, which is a large
intentions are significantly related to their gender, education, age, customer market, is still not in line with the global market. This
security concern, technological familiarity, and past online purchase is the reason that triggered the idea of conducting a research in
frequency. Consumer buying behavior is also affected by product type, this area.
purchase frequency and expensiveness. Their purchase decisions are
also found to be related with the online retailer’s services like return, There is a huge opportunity for e-retailers as the average
refund and delivery services. annual growth of this market is estimated around 70% by Internet
The framework of the research enhances understanding of the factors and Mobile Association of India. The no. of online buyers is
affecting customer online shopping behaviour, helps in profiling expected to increase to approximately 38 million users transacting
typical Indian online shoppers and may help e-marketers developing online by 2015. Today, an Indian shopping online may do two to
more specific marketing strategies to increase e-commerce sales. three transactions per month. In just another two to three years as
the market grows and matures, the average online shopper could
Keywords:
be doing four to five transactions per month.
Online Shopping Intentions, Online Shopping, Customer Therefore industry should focus on the factors that affect the
Characteristics, e-Retailing, e-Commerce buying behavior of Indian customers. Although many studies have
shown that customer characteristics are important when it comes
1. INTRODUCTION to online shopping, but majority of those researches are performed
outside India. To fill this gap, the following research is proposed
to examine how different customer characteristics affect customer
Today, internet acts as a channel through which millions of
purchase intentions while shopping online in India.
people communicate, perform research, find entertainment and
most recently buy and sell products and services. In fact, online
shopping is one of the most popular activities that take place on 2. LITERATURE REVIEW
internet. Here are some statistics to validate the above statement.
India currently has a base of 150 million internet users which 2.1 ADOPTION OF ONLINE SHOPPING IN INDIA
accounts to be the third largest in the world [5]. Last three decades have seen a phenomenal growth of World
Wide Web. A wide acceptance of internet technology in the field

136
ISSN: 2395-1664 (ONLINE) ICTACT JOURNAL ON MANAGEMENT STUDIES, AUGUST 2015, VOLUME: 01, ISSUE: 03

of business has changed the traditional retail format to the new and Kotler, 2003; Wu, 2003). Personal characteristics are
form popularly known as internet shopping or online shopping. divided into Age and Life-Cycle Stage, Occupation, Economic
The internet is a platform that provides the customer with Situation, Lifestyle, Personality and Self-concept (Armstrong
purchase characteristics as no other medium. There are certain and Kotler, 2003; Adcock et al, 1995; Hawkins, Best and Coney,
characteristics which make internet a more convenient & 1995; Wu, 2003). Last but not the least psychological
attractive place to shop for consumers as compared to the characteristics can be defined by Motivation, Perception,
traditional way of shopping, such as the facility to view and Learning, and Beliefs and Attitudes (Armstrong and Kotler,
purchase products any time, visualize their needs with products, 2003; Wu, 2003).
compare between different brands of products, discuss products These customer characteristics will be studied specifically
with other consumers, option to pay on delivery etc. for the online customers. The characteristics will be studied to
Online-shopping is the process consumers go through when segment the online consumer by analyzing:
they decide to shop on the internet. The internet has developed  The customer’s demographics
into a new distribution channel (Hollensen, 2004) and the
evolution of this channel, e-commerce, has been identified by  Life patterns concerning Online Behaviour, such as how
Smith and Rupp (2003) to be the most significant contribution of much the consumer uses the Internet, & for what purposes.
the information revolution. Today, internet has developed into a Prior experiences have also been identified to be relevant for
highly competitive market and in order to have an impact on what Beliefs and Attitudes the customer has towards online
customers and to retain them, it is the first step to identify certain shopping and are therefore also important for the research.
influencing aspects when purchasing online, these can be These are the customer characteristics that are relevant for
regarded as factors. The proposed research will be focused on this research and need to be identified in order to find out who
identifying & analyzing these factors. the online customer is and what affects him when shopping
online.
2.2 CONSUMER CHARACTERISTICS AND ITS
IMPACT ON ONLINE SHOPPING
3. RESEARCH OBJECTIVES & HYPOTHESIS
Many previous researches have been done in the field of e-
commerce. In a study conducted by Kunz (1997) on online Following objectives have been framed for the research:
shopping, it was found that customer demographics affect the  To know about the purpose of using internet.
purchase intentions in a significant manner. The results of the
 To find popular e-tailing websites.
study says that men are more likely to purchase via internet, and
those who intend to shop online are likely to be young. The  To know about the most popular category of item
study also explored that people living in large metropolitan areas purchased online.
do less shopping online as compared to those who live in  To study the impact of demographic characteristics of
suburban areas. customers on their online purchase pattern.
Few other studies (Fram & Grady, 1997; Mehta & Sivadas, Based on the literature review following hypothesis have
1995; Sultan & Henrichs, 2000) also reported that gender, been framed:
marital status, residential location, age, education and household H1: As compared to females, males are more likely to
income are important predictors of internet purchasing. engage in online shopping.
Another research conducted by Donthu & Garcia (1999) for H2: Age is positively related to online buying.
consumer characteristics related to online shopping, it was found
that consumers who seek convenience & variety do more H3: Education is positively related to online shopping.
shopping online. They also found that such people are also more H4: Income is positively related with online shopping.
innovative and spontaneous. In a study by, Siu and Cheng H5: The greater the concern for security and privacy issues,
(2001) it was found that economic benefits, product availability, the lower is the likelihood of a consumer engaging in
security risk are also important factors in classifying online online shopping.
shoppers.
H6: Consumer familiarity with the technology positively
Zhou et al. (2007) discovered that customer traits, internet influences their online buying decision.
self efficacy, prior online shopping experience, shopping
H7: Higher the frequency of online purchases made in the
orientations, economic benefit perception, risk perception are
past, more likely such customers would be engaging in
some of the factors affecting online shopping acceptance of
online shopping in future.
customers.
Customer characteristics can be explained in following 4. RESEARCH METHODOLOGY
categories: cultural, characteristics, social characteristics,
personal characteristics and psychological characteristics.
The present research work is descriptive and analytical based
Cultural characteristics are developed by three features- culture,
on empirical observation and comprehensive survey. In order to
sub culture and social class (Hawkins, Best and Coney, 1995;
test the above framed hypotheses, a survey of consumers
Armstrong and Kotler, 2003; Peter and Donnelly, 2001, Wu,
residing in Bareilly region was carried out with the help of a
2003), while social characteristics may be defined with the help
'structured non-disguised' questionnaire. A pilot study was also
of reference groups, family, social roles, & status (Armstrong
conducted on a sample of 15 respondents. Some modifications,

137
UPASANA KANCHAN et al.: A STUDY OF ONLINE PURCHASE BEHAVIOUR OF CUSTOMERS IN INDIA

additions and deletion of questions are made according to the Table.6. Popular e-tailing websites (in Percentage)
results of pilot study & suggestions of subject experts. Then the
final study was conducted on a sample of 200 respondents in the Flipkart 23
Bareilly district. Jabong 12
The sample was drawn using convenience sampling method.
The questionnaire developed for the study was personally Homeshop 18 21
administered to 200 respondents in the month of February-April Snapdeal 10
2014. Questions were prepared using nominal, ordinal and likert
scales. Percentage method, Correlation analysis and Chi-Square ebay 21
test were used for analyzing the responses. Yebhi 7
Others 6
5. ANALYSIS OF STUDY
Following tables shows the summary of responses given by Table.7. Popular categories of items purchased online (in
respondents: Percentage)

Books/CDs/Software 22
Table.1. Classification of respondents on the basis of gender (In
percentage) Apparels 19
Male 59 Electronics/Mobiles/Home Appliances 14
Female 41 Jewellery 9
Tickets 21
Table.2. Classification on the basis of Age (No. of respondents)
Travel Packages 9
Less than 15 years 10 (5%) Others 6
15-30 years 25 (12.5%)
Table.8. Factors motivating to shop Online (in Percentage)
30-45 years 120 (60%)
Time saving and convenient 24
Above 45 years 45 (22.5%)
24*7 available 16
Table.3. Classification on the basis of education level (No. of Discounts/ price deals 10
respondents) Easy Price comparison 18
Under Graduate 15 Cash on delivery 12
Graduates 25 30 days return policy 6
Post Graduates 40
Wider Variety 12
Professionally Qualified 120
5.1 HYPOTHESIS TESTING
Table.4. Average Monthly Income (No. of respondents)
For testing various hypotheses, Correlation analysis and Chi-
Less than 15 thousand 45 Square test has been performed on the collected data. Results are
presented below in the various tables.
15 -30 thousand 90
5.2 GENDER AND ONLINE PURCHASE
30 -50 thousand 40 FREQUENCY
More than 50 thousand 25 Chi-Square test was used to assess the impact of gender on
online purchase frequency. The results are presented in the
following tables.
Table.5. Purpose of using internet (in Percentage)

Communication 29 Table.9. Gender and past online purchase frequency cross-

tabulations
Information Gathering 22
Gender
Entertainment 27 Total
Male Female
Shopping 21 Past online Count 6 15 21
Never
purchase Expected Count 12.4 8.6 21.0

138
ISSN: 2395-1664 (ONLINE) ICTACT JOURNAL ON MANAGEMENT STUDIES, AUGUST 2015, VOLUME: 01, ISSUE: 03

frequency Count 40 36 76 Pearson

1-5 times .401** 1
for last Expected Count 44.8 31.2 76.0 Correlation
year Age
Count 43 16 59 Sig. (2-tailed) .000
5-10 times N 200 200
Expected Count 34.8 24.2 59.0
Count 19 9 28 **. Correlation is significant at the 0.01 level (2-tailed).
10-15
times Expected Count 16.5 11.5 28.0 The result clearly indicates that there is a significant
more than Count 10 6 16 correlation among age of respondents and their online purchase
15 times frequency. It can be concluded that age is positively related to
Expected Count 9.4 6.6 16.0
online purchase frequency.
Count 118 82 200
Total
Expected Count 118.0 82.0 200.0 5.4 EDUCATION AND ONLINE PURCHASE
FREQUENCY
Table.10. Chi- Square Tests
Correlation analysis has been used to see whether there exists
Asymp. Sig. any relationship between education of respondents and online
Value df
(2-sided) purchase frequency of the respondents. The following tables
Pearson Chi-Square 15.001a 4 .005 show the results.
Likelihood Ratio 15.170 4 .004
Table.13. Education level and past online purchase frequency
Linear-by-Linear
7.875 1 .005 cross-tabulations
Association
N of Valid Cases 200 Education level
It can be observed that gender significantly affects the online

Post Graduate

Professionally
purchase frequency (p<0.01). It can therefore be concluded that

Graduate

Graduate

Qualified
Under
males are more likely to engage in online shopping. Total

5.3 AGE AND ONLINE PURCHASE FREQUENCY

Correlation analysis has been used to see whether there exists
any relationship between age and online purchase frequency of never 15 10 0 0 25
frequency for last year
Past online purchase

the respondents. The following table shows the results. 1-5

0 15 24 36 75
times
Table.11. Age and past online purchase frequency cross- 5-10
0 0 18 38 56
tabulations times
10-15
Age 0 0 0 28 28
times
less than 15-30 30-45 above Total
more than
15 yr yr yr 45 yr 0 0 0 16 16
15 times
never never 10 14 1 0
Total 15 25 42 118 200
purchase frequency

1-5 times 1-5 times 0 11 45 19

for last year
Past Online

5-10 5-10 Table.14. Correlations

0 0 37 19
times times
10-15 10-15 Past online
0 0 22 6 purchase Education
times times
frequency for level
more than more than last year
0 0 16 0
15 times 15 times Pearson
Past online 1 .657**
Total 10 25 121 44 200 purchase Correlation
frequency Sig. (1-
.000
Table.12. Correlations for last tailed)
year N 200 200
Past online purchase Pearson
.657** 1
frequency for last Correlation
year Education Sig. (1-
level .000
tailed)
Pearson
Past online 1 .401** N 200 200
purchase Correlation
frequency for Sig. (2-tailed) .000 **. Correlation is significant at the 0.01 level (1-tailed)
last year N 200 200

139
UPASANA KANCHAN et al.: A STUDY OF ONLINE PURCHASE BEHAVIOUR OF CUSTOMERS IN INDIA

Table.15. Average Monthly income and past online purchase more

frequency cross-tabulations than
16 0 0 0 0 16
15
Past online purchase frequency for last times
year
more Total Total 53 65 50 13 19 200
1-5 5-10 10-15
never than 15
times times times Since correlation is found to be significant therefore results
times
can be interpreted as Average monthly income is positively
less than correlated with the online purchase frequency of customers.
25 20 1 0 0 46
15K
5.5 SECURITY CONCERN AND ONLINE
avg_monthly_income

15-30k 0 31 31 22 6 90 PURCHASE FREQUENCY

Correlation analysis is performed to know how online
purchase frequency is related to the security concern of
30-50K 0 20 5 5 10 40 respondents while shopping online. The following table shows
the results.

Table.18. Correlations
above
0 4 19 1 0 24
50K Past
online
Total 25 75 56 28 16 200 purchase Security
frequency Concern
for last
Table.16. Correlations
year
Past online Pearson
purchase Avg. monthly
Past online 1 -.443**
purchase Correlation
frequency for income
last year frequency for Sig. (2-tailed) .000
last year N 200 200
Pearson
Past online 1 .401**
Correlation Pearson
purchase -.443** 1
frequency for Sig. (2-tailed) .000 Security Correlation
last year N 200 200 Concern Sig. (2-tailed) .000
Pearson
.401** 1
N 200 200
Avg. monthly Correlation
The results clearly indicate that there is a negative correlation
income Sig. (2-tailed) .000 between the concern for security and online purchase frequency.
N 200 200 Therefore, it can be interpreted that the higher will be the
**. Correlation is significant at the 0.01 level (2-tailed). concern for security, the less no. of online purchases will be
made by the customers.
Table.17. Security concern and past online purchase frequency
cross-tabulations
5.6 CONSUMER FAMILIARITY WITH
TECHNOLOGY AND ONLINE PURCHASE
How much concerned are you FREQUENCY
about security and privacy while
purchasing online Correlation analysis was performed to check the relationship
Total between technology familiarity and online purchase frequency.
not very
at all 2.00 3.00 4.00 much The following table summarizes the results.
concerned concerned
Table.19. Technology familiarity and past online purchase
never 7 5 2 0 11 25 frequency cross-tabulations
1-5 Past online purchase frequency
Past online times 10 25 25 10 5 75
for last year
purchase
5-10 more Total
frequency 8 21 23 2 2 56
times 1-5 5-10 10-15 than
for last year never
10- times times times 15
15 12 14 0 1 1 28 times
times Technology Not so
17 0 1 0 0 18
familiarity familiar

140
ISSN: 2395-1664 (ONLINE) ICTACT JOURNAL ON MANAGEMENT STUDIES, AUGUST 2015, VOLUME: 01, ISSUE: 03

Average Count 114 86 200

8 48 9 4 0 69
knowledge Total Expected
Very 114.0 86.0 200.0
Count
much 0 27 46 24 16 113
familiar
Table.22. Chi-Square Tests
Total 25 75 56 28 16 200
Asymp. Sig.
Table.20. Correlations Value df
(2-sided)
Past online Pearson Chi-Square 53.550a 4 .000
Technology purchase
Likelihood Ratio 57.833 4 .000
familiarity frequency for
last year Linear-by-Linear
46.466 1 .000
Past online Pearson **
Association
1 .646
purchase Correlation N of Valid Cases 200
frequency Sig. (2-tailed) .000
for last It can be observed that past online purchase frequency
year N 200 200 significantly affects the future online purchase intention
Pearson (p<0.01). It can therefore be concluded that higher the frequency
.646** 1
Technology Correlation of online purchases made in the past, more likely such customers
familiarity Sig. (2-tailed) .000 would be engaging in online shopping in future.
N 200 200
**. Correlation is significant at the 0.01 level (2-tailed). 6. FINDINGS & IMPLICATIONS
The value of r is significant at 99% confidence level. The objective of this paper was to assess the impact of
Therefore it can be interpreted that consumer familiarity with the customer characteristics on their online shopping intentions.
technology positively influences their online buying decision Based on the review of literature, a total of six customer-related
factors were identified and examined in the study. Major
5.7 PAST ONLINE PURCHASE FREQUENCY AND
findings of the study and their implications are as follows:
FUTURE ONLINE PURCHASE INTENTIONS
Both the genders are likely to purchase goods/services online
Chi-square test has been performed to assess the impact of but as compared to females, males do more online shopping.
past online purchase frequency on future online purchase Most of the time people use internet for communication
intentions. The following tables show the results. purpose i.e. for e-mail, chatting, social networking etc. but
people also use internet for entertainment, information gathering
Table.21. Future purchase intentions and past online purchase and shopping purpose.
frequency cross-tabulations
It has been analyzed that people in the age group between
I will purchase 30-45 years are more interested in doing online shopping as
goods/services online compared to other age groups.
in future Total Income has a positive relationship with online purchase
yes no frequency. People having higher income are more engaged in
purchasing goods over internet.
Count 6 19 25
never
Education level of respondents was also found to be
Expected positively correlated with online purchase frequency implying
14.3 10.8 25.0
Count that the higher the education level of people, more they have
Count 26 49 75 tended to prefer buying goods online.
1-5
times Expected The most popular website for online shopping was flipkart.
42.8 32.3 75.0
Past Count Although many people are also aware about ebay and
online Count 43 13 56 homeshop18.
purchase 5-10 The most popular items purchased by people over internet
frequency times Expected
Count
31.9 24.1 56.0 are books followed by tickets and apparels.
for last
year Customers’ concern for security is found to be negatively
Count 24 4 28
10-15 correlated with their online purchase decision. People highly
times Expected concerned about security of personal information, passwords,
16.0 12.0 28.0
Count financial transactions are less likely to do online shopping.
more Count 15 1 16 A positive relationship between past online purchase
than 15 Expected frequency and future online shopping intentions is observed
times 9.1 6.9 16.0 implying that customers who purchased more products via internet
Count
in past will continue to make online purchases in future too.

141
UPASANA KANCHAN et al.: A STUDY OF ONLINE PURCHASE BEHAVIOUR OF CUSTOMERS IN INDIA

Technology familiarity of the respondents is found to be technological complexity in making online purchase. Companies
positively related with past online purchase frequency. The involved in online retailing should focus on building trust-
implications are once again that people having high knowledge worthy relationship between producers and customers.
of technology are more likely to shop online.
The managerial implications of above findings are that the REFERENCES
online marketers need to target their products to young and more
educated customers earning higher income. Educated persons [1] Joseph Alba, John Lynch, Barton Weitz, Chris Janiszewski,
are likely to be more internet savvy and higher income enables Richard Lutz, Alan Sawyer and Stacy Wood, “Interactive
them to purchase more online provided they are sufficiently home shopping: consumer, retailer and manufacturer
exposed to online shopping outlets and motivated to place orders incentives to participate in electronic marketplaces”,
online. The findings of the study suggest that online marketers Journal of Marketing, Vol. 61, No. 3, pp. 38-54, 1997.
should ensure about the high security of personal information of [2] Billy Bai, Rob Law and Ivan Wen, “The impact of website
customers and financial transactions along with providing good quality on customer satisfaction and purchase intentions:
experience of online shopping so that customer may continue evidence from Chinese online visitors”, International
purchasing online in future also. Journal of Hospitality Management, Vol. 27, No. 3, pp.
391–402, 2008.
7. CONCLUSION [3] Sanjay K. Jain and Manika Jain, “Exploring Impact of
Consumer and Product Characteristics on E-Commerce
Though online shopping is very common outside India, its Adoption: A study of consumers in India”, Proceedings of
growth in Indian market, which is a large customer market, is 5th International Conference on Services Management, pp.
still not in line with the global market. According to India B2C 157-169, 2011.
E-Commerce Report 2013, e-tailing accounts for less than 1 [4] Kumar Shefali, “Consumers’ Behavioral Intentions
percent of the overall retail market in India in 2012. While it Regarding Online Shopping”, Ph.D Thesis, School of
accounts for over 5 percent if the total retail market in China and Merchandising and Hospitality Management, University of
10% in the UK and the US. This shows that only a small fraction North Texas, 2000.
of internet users in India are currently online shoppers. The [5] “The Internet Shopper” in “Marketing Whitebook 2013-
reason could be that it is not the technology but the way 14”, Business World, 2014.
customers feel about high-tech purchasing that is holding back [6] Franziska Brecht, Kerstin Schäfer, Annika Baumann and
the development of the industry (Reda, 1995). Hence this is Oliver Guenther,, “Shopping Online – Determining
imperative that marketers understand the depth of customer Consumer Acceptance of Online Shops”, Proceedings of
intentions for this medium of retailing. the Seventeenth Americas Conference on Information
Systems, 2011.
It can be concluded on the basis of study that online
[7] http://articles.economictimes.indiatimes.com/2009-12-
shopping is gaining popularity among people of young
17/news/28394286_1_mobile-platform-ebay-online-
generation. Higher income groups and educated people are
shopping
purchasing more via e-retailing websites. People have
hesitations in doing online shopping due to security concerns. At
the same time people are resistant to change because of

142