Impact of E-Retailing On Consumer buying behavior

Komal
Research student
P.G. Department of commerce
MCM DAV College for women
Sec-36 Chandigarh Panjab University
Komal6633@yahoo.com
Abstract
In its current form, the Internet is primarily a source of communication, information and
entertainment but increasingly also a vehicle for commercial transactions. An understanding of
reasons for purchasing on the World Wide Web is particularly relevant in the context of
predictions made regarding electronic shopping in the future. In the paper, the antecedents to
electronic exchange in the online context are examined. In particular, what are some of the
factors influencing online purchasing behavior? What is the role of privacy and security concerns
in influencing actual purchase behavior? How do vendor and customer characteristics influence
consumers propensity to engage in transactions on the Internet?
The main goal of the paper is to obtain quantitative describing the actuality of internet shopping
in the case of the India in order to explain the development of internet shopping and its impact on
consumer behavior. The paper build on the relevant literature and at the same time examines
consumer behavior by questionnaires. Furthermore, the future development of internet shopping
will be measured and deep comparison of consumer behavior between different countries. This
paper support the research questions that including recent trends and various issues in internet
shopping, and principle factors for consumer behavior. More specifically, the empirical result
suggests how the E-commerce companies make marketing strategies according the research data
and analyzing result.
Keywords: E-commerce, internet shopping, World Wide Web, consumer behavior, privacy and
security, consumer trust.
1. Introduction:
The internet is being developed rapidly since last two decades, and with the relevant digital
economy that is driven by information technology (IT) also being developed world wide. After a
long term development of internet, which rapidly increase the web users and internet connection
thereto. Therefore detailed product information and improved services attract more and more

people changed their consumer behavior from traditional mode to more rely on internet
shopping. On the other hand, e-retailing companies have also realized that ever change in
consumer behavior leads them to change their marketing strategy. As the recent researches have
indicated that, the internet shopping particularly in business to consumer (B2C) has risen and
online shopping become more popular too many people. There are many reasons for such a rapid
developing of internet shopping, which mainly due to the benefits that internet provides. First of
all, the internet offers different kind of convenience to consumers. Obviously, consumers do not
need go out looking for product information as the internet can help them to search from online
sites, and it also helps evaluate between each sites to get the cheapest price for purchase.
Furthermore, the internet can enhance consumer use product more efficiently and effectively
than other channels to satisfy their needs. Through the different search engines, consumers save
time to access to the consumption related information, and which information with mixture of
images, sound, and very detailed text description to help consumer learning.
However, internet shopping has potential risks for the customers, such as payment safety, and
after service. Due to the internet technology developed, internet payment recently becomes
prevalent way for purchasing goods from the internet. Internet payment increase consumptive
efficiency, at the same time, as its virtual property reduced internet security.
Online retail is attracting an increasing numbers of consumers as well as companies. At present,
Amazon.com, snapdeal.com, mantra.com, etc, are among most successful online companies.
Some researchers as well as practitioners suggest that true visionaries of the Internet commerce
expect this medium to fundamentally transform business (Clark, 1997). Bill Gates, cofounder of
Microsoft, refers to the Internet as to friction free capitalism and thus emphasizes the free flow
of one-to-one interactions that is possible only with the Internet use (Gates et al., 1995).
Difference between online and offline shopping:
Even the internet shopping has been rapidly developed, especially in consumer goods industry,
but there still have a big difference between traditional and online consumer shopping. Referred
to sales in the Indian consumer goods industry, the online sales occupied at a very low
percentage rate. That could be caused by many reasons, but the most importance is the
advantages exist in both traditional shops and online market; both of them have specific
characteristics. For example, the traditional seller can provide convenience in parking and
shopping, it allows customers come to read and check the quality of goods before they purchase,
and the after service is more directly to customers. However, the traditional store has limited
number of goods, and the selling cost is higher than online store. By comparison, we can find out
the limitations of traditional store are more likely as the advantages of online store, in contrast,
the weakness of online store is also seems as the advantages of traditional store. It is clear from
the overview of internet and internet shopping development that e-commerce is being used in
many corporations due to the dramatic development of technology and competitive advantages
of web selling. Moreover, the expansions of the usage by individuals also become main
contributors to the development of internet shopping. Relatively few studies have investigated in
the internet shopping and impact on consumer behavior. The previous studies are more focus on
the markers point of view, such as how to establish a more efficient marketing channel online
rather than the traditional offline channel. Therefore, this research will combines with previous

studies from literature reviews, and focus on the impact of the internet shopping on consumer
behaviors to find out a comprehensive analytical framework which showing the essential
ingredient of marketing and business to satisfying the consumers needs, and a deeply
understanding of online consumer behavior as a reference for any ecommerce company to make
marketing strategies.

2. REVIEW OF LITERATURE
Hirschman and Holbrook, 1982; Babin et al., (1994), Next to the evidence for the critical role of
extrinsic motivation for technology use, there is a significant body of theoretical and empirical
evidence regarding the importance of the role of intrinsic motivation.
Davis, (1993). Their study reveals that if more attractive online stores were developed. This
raises the issue of examining what factors affect consumers to shop online. Therefore, a
framework is needed to structure the complex system of effects of these different factors, and
develop an in-depth understanding of consumers perceptions toward Internet shopping and their
intentions to shop online.
Davis (1993) in his study reveals that we build up such a framework based on previous research
on consumer adoption of new self-service technologies and Internet shopping systems. The
research suggests that consumers perception toward Internet shopping first depends on the direct
effects of relevant online shopping features.

Holbrook, (1994). Intrinsic motivation for Internet shopping is captured by the enjoyment
construct in our framework. Intrinsic value or enjoyment derives from the appreciation of an
experience for its own sake, apart from any other consequence that may result.
Venkatesh (2000) online shopping Computer playfulness is the degree of cognitive spontaneity
in computer interactions. Playful individuals may tend to underestimate the difficulty of the
means or process of online shopping, because they quite simply enjoy the process and do not
perceive it as being effortful compared to those who are less playful Computer anxiety is
defined as an individuals apprehension or even fear when she/he is faced with the possibility of
using computers. This influences consumers perceptions regarding the ease of use of the
Internet as a shopping medium in a negative way, since using a computer is one of the necessary
requirements for online shopping.
Childers et al (2001) concluded that enjoyment results from the fun and playfulness of the
online shopping experience, rather than from shopping task completion. The purchase of goods
may be incidental to the experience of online shopping. Thus, enjoyment reflects consumers
perceptions regarding the potential entertainment of Internet shopping found enjoyment to be a
consistent and strong predictor of attitude toward online shopping.
Benedict et al (2001) in his study on perceptions towards online shopping reveals that
perceptions toward online shopping and intention to shop online are not only affected by ease of

use, usefulness, and enjoyment, but also by exogenous factors like consumer traits, situational
factors, product characteristics, previous online shopping experiences, and trust in online
shopping.

Menon and Kahn, 2002; Mathwick et al., (2001). Says that If consumers enjoy their online
shopping experience, they have a more positive attitude toward online shopping, and are more
likely to adopt the Internet as a shopping medium. In our framework, we identify three latent
dimensions of enjoyment construct, including escapism, pleasure, and arousal
Escapism is reflected in the enjoyment that comes from engaging in activities that are
absorbing, to the point of offering an escape from the demands of the day-to-day world.
Pleasure is the degree to which a person feels good, joyful, happy, or satisfied in online
shopping.
GfK Group (2002) shows that the number of online shoppers in six key European markets has
risen to 31.4 percent from 27.7 percent last year. This means that 59 million Europeans use the
Internet regularly for shopping purposes. However, not only does the number of online shoppers
grow, the volume of their purchases also increases over-proportionally.
Reinhardt and Passariello, (2002) In the US, says that online sales are forecasted to exceed $36
billion in 2002, and grow annually by 20.9 percent to reach $81 billion in 2006. Europeans are
spending more money online as well. Whereas combined revenues for Amazon.coms European
operations grew at more than 70 percent annually in each of the past three quarters, topping $218
million. While these figures show that a large number of consumers in the US and Europe
frequently use the Internet for shopping purposes, it is not clear what drives them to shop online
and whether these numbers could be even Dabholkar and Bagozzi et al, (2002) OCass and
Fenech, (2002);Childers et al., (2001);

Menon and Kahn, (2002); Childers et al., (2001); Mathwick et al., (2001) concluded that Online
shopping features can be either consumers perceptions of functional and utilitarian dimensions,
like ease of use and usefulness, or their perceptions of emotional and hedonic dimensions
like enjoyment by including both utilitarian and hedonic dimensions, aspects from the
information systems or technology literature, as well as the consumer behavior literature are
integrated in our framework.
Burke et al., (2002) In addition to these relevant online shopping features, also exogenous factors
are considered that moderate the relationships between the core constructs of the framework.
Burke et al.,(2002); Relevant exogenous factors in this context are consumer traits situational
factors product characteristics previous online shopping experiences and trust in online
shopping By incorporating these exogenous factors next to the basic determinants of
consumers perception and intention to use a technology, the framework is applicable in the
online shopping context. Together, these effects and influences on consumers perception toward
online shopping provide a framework for understanding consumers intentions to shop on the
Internet.

.
Zenithal et al., (2002) In addition to these four latent dimensions, site characteristics like
search functions, download speed, and navigation, also play a role in shaping ease of use. But
since these site characteristics merely influence the ease of use of a particular Web site or
online store, and not the Internet as a shopping medium in general, we choose not to elaborate on
these sites.

3. Research methodology
Objective of the study

1. To know the demographic profile of the customers and its impact if any on the
online buying.
2. To know the factors affecting the perception of Indian online buyers.

Collection of data
1. Through oral and email questionnaire from respondents.
2. Secondary data is collected from the other similar research paper.
3. By reading a review of consumers through various websites.
Data analysis

Demographic profile of the respondents.

The following table reveals the Age, Gender, Education & Income details of respondents who
uses internet.
Table 1 AGE
Particulars
No. of respondents
Percentage
Valid< 18 years
16
8.0
18-29 years
148
74.0
30-39 years
28
14.0
>-40 years
8
4.0
Total
200
100.0

Table 2 Gender
Valid
Male
Female
Total

Frequency
132
68
200

Percentage
66
34
100

Table 3 Education Qualification

Valid
Intermediate
Graduate
PG
Others
Total

Frequency
28
68
88
16
200

Percentage
14
43
44
8
100

Table 4 monthly incomes

Particulars
<5000
5001-10000
10001-15000
15001-20000
20001 & above
Total

Frequency
8
32
68
32
60
200

Percentage
4
16
34
16
30
100

The above tables reveal that from the sample which we have collected, 66% are males and
remaining 34% are females. As far as the age of the respondents are concerned 74% are between
18-29 years followed by 30-39 years with 14%. If we consider the educational qualifications
78% of respondents are postgraduates & graduates and only 14% are having intermediate. As far
as their monthly income is concerned 34% are earning between 10001- 15000 rupees followed
by 30% with an income of 20000 plus per month.
H1 - There is a significant relationship between overall website quality and online
shopping.
The results of this study show that the association between overall website quality and online
shopping is not significant. The multiple regression result shows overall website quality have
beta = .072; p-value = .113. The results prove that, the null hypothesis that there is no
relationship between web site design and online shopping could not be rejected
H2 - There is a significant relationship between commitment and online shopping.
Commitment is the important factor that affects online buying and most of the consumers are
concerned about on-time delivery of their products (Shergill and Chen, 2005). The results of this
study show that there is a significant association between commitment and online shopping. It is
significant at 0.01 level. Accordingly, the hypothesis 3 could not be rejected. In addition, the
direction of the associations is positive in which it indicates that the higher the commitment of
the web site of e-retailers, the higher will be online buying
H3 - There is a significant relationship between customer service and online shopping.
Ainscough (1996) found that most of the companies in his study used online as a way to provide
help and service to their customers. The online customer service factor is another important
factor that has positive effects on online shopping. Referring to Table 3, the fourth hypothesis
tested the relationship between customer service and online shopping. The regression result (beta
= .253, t-value = 5.231, p-value = 0.001) indicates that the association between customer service
and online is significant at 0.01 level (p = 0.000)
H4- There is a significant relationship between website security and online shopping.
Table 3 shows that the association between web security and online shopping is significant at
0.01 level whereby the analysis result showed the beta = 0.162 and t-value = 3.648 (p=0.000).
The support for hypothesis 5 reflects similar arguments in previous studies (Shergill and
Zhaobin, 2005; Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004;
Koufaris and Hampton-Sosa, 2002). Similarly, it demonstrates that web security is also playing
an important role in an online buying situation. As such, it is recommended that the online
companies to build this kind of trusting relationship by developing strategy that could instill
sense of belongingness between them and the consumers.
4

Impact of E-retailing on consumer behavior:

3.1 Consumer characteristics: The relationship marketing literature suggests that consumer
characteristics, e g., sociological orientation, play an important role in a consumers propensity to
engage in the Internet transactions (Seth and Parvatiyar 1995). The retailing literature also
suggests that consumer characteristics are important indicators of the probability of making
purchase decisions on the Internet. In his pioneering study, Stone (1954) suggested that shopping
behavior has social-psychological origin and classified shoppers into four types: economic
shopper, the personalizing shopper, the ethical shopper and the apathetic shopper. Another
typology was identified by Stephenson and Willett (1969) who grouped consumers into
recreational, convenience and price oriented shoppers.
They suggest that the recreational shopper is motivated by the social aspects of shopping. Past
research suggests that the Internet is less attractive to consumers who value social interactions
since it allows for very limited interactions relative to other retail formats such as department
stores. Therefore, it is hypothesized that those consumers who are primarily convenience
shoppers are more likely to shop online than those that seek social interaction.
3.2. Individual differences
Individual Differences Demography (age, gender, profession, education etc) affect how
technology is used (Zmud, 1989; Assael, 1981). Hence, its important to study the impact of
demographic variables on online shopping. The socio-economic status of early adopters is higher
than late adopters (Rogers, 1995). Men and women also differ in their attitudes toward eshopping. Traditional Indian women regard shopping as a social release. In most of the families,
women are the chief decision makers (Dholakia, 1999). Men are more motivated toward
utilitarian benefits of products and give lesser importance to social relations and personal
contacts (Steenkamp et al., 57 1999). Many women perceive shopping as an entertainment
channel to socialize and interact with other consumers. Hence they prefer to buy offline than
online.
3.3. Factors influencing the consumer behavior:
The influences on consumer behavior are often made between external and internal factors.
External factors are come from the environmental conditions, and internal factors are usually
from the consumers mind. There are many factors could influence consumers behaviors.
Internal factors influence the consumer behavior:
Like consumer preferences, tastes, believes, custom, and ethics are some of the internal factors
which influence the consumer behavior towards online shopping as the consumer feel more
secure in offline shopping because of tangible product, they want to touch and feel the product
before buying. But similarly online shopping or E-retailing now-a-days increase its services in
such a way that any product bought by consumer allows them to return the product (according to
the return policy) if consumer do not satisfied the stuff or any kind of matter thereon.
External factors influence the consumer behavior:
Environmental factors such as Demographics, socio-economics, technology and public policy;
culture, sub-culture; reference groups; and marketing are some of the external factors that have a
great impact on consumer behavior as it influence the consumer behavior for buying online than
offline.
3.4. Motives of online shopping:

Consumer behavior has two types of motives while shopping, functional and non-functional.
The functional motives are mostly about the time, shopping place and consumers needs, which
could be like one-stop shopping to save time, the environmental of shopping place such as free
parking place, lower cost of products and available to choose from widely range of products.
The non-functional motives are more related with culture or social values, such as the brand
name of the store.
3.5. Impact of Internet Shopping:
Internet shopping and traditional shopping are sharing many similarities, at the same time, it still
exists some differences between them, such as the Internet shopping could provide convenience
and interactive services (Jarvanpaa and Todd, 1997), and the traditional shopping could gives
customers more comfortable shopping environment and good quality of products (Lee and
Chung, 2000). Both aspect of shopping malls are trying to improving their services by learn
commutatively from each other, such as traditional shopping malls provide more parking spaces,
more counters, and closer to residential area in order to improve services in convenience;
Internet shopping malls adopt virtual reality (Lee, 2001) and 3D techniques (Miller, 2000) to
improve the presentation of products. Internet shopping has an impact on consumer behavior by
the means of convenience and technology.
Convenience; Internet provides a big convenience for shopper as the main reason for the
shopping online has been agreed by most of researcher and customers (Wolhandler, 1999). Due
to the feature of Internet, it allows customer to shopping online anytime and anywhere, which
means customer can browse and shopping online 24-hours a day, 7 days a week from home or
office, which attracts some time-starved shoppers come to Internet for save time to searching
products in physical store. Additionally, Internet offers some good ways to save money and time.
Hence has a positive impact on consumer behavior. For example, shoppers do not need go out to
the physical store and thus there is no transportation cost.
Technology; the convenience based on Internet is mainly according to the technology
development, and which plays a key role during the development of Internet shopping. In the last
decade, organizations have realized that the new technology could impact on Internet shopping
deeply, and thus there are many important technologies like virtual reality and 3D techniques
have adopted to gain big competitive advantages (Clark, 1989). Information technology has used
in the form of the Internet improved better quality of product information, which help shoppers
decision making (White, 1997). Through the wide range of surveys about the Internet use, the
growth of Internet and the rate of growth of Internet usage have been rapid increased in the last
decade. The number of Internet users has increased to 22.7 million among 48.4% of the adult
population, and about 63% of Internet users have reported that shopping is a primary use of the
Web.
From the report, in the aspect of Internet shopping, there are 30 million users often shopping
online, and near 1/4 Internet users have online shopping experience. Both surveys shows that
more and more Internet users prefer online payment while they shopping, thus the security of
online payment certainly will become a significant factor to influence the Internet shopping.
Finally, this study shows that consumers who are primarily motivated by convenience are more
likely to make purchases online. Those who value social interactions are less interested in the
Internet use for shopping and thus shop less frequently on the Internet and spend less money on
e-commerce. This in itself is valuable because it suggests that retailers have to fine tune their

offerings, and provide very specific solutions to each segment of customers at the aggregate
level, and individual customers if possible. With advances in personalization and customization,
the notion of one-to-one marketing can be realized. These findings should be valuable for
marketers for the purpose of segmentation and targeting their prospective buyers.
3.6. Consumer Trust in Internet Shopping
Mayer, Davis, and Schoorman (1995) defined trust as, the willingness of a party to be
vulnerable to the actions of another party based on the expectation that the other will perform a
particular action important to the trustor, irrespective of the ability to monitor or control that
other party (p.712) (Cheung and Lee, 2006). This definition is widely recognized and the most
frequently cited (Rousseau, Sitkin, Burt, & Camerer,). People purchase products and services are
the most based on their level of trust in this product or services, and sellers either in the physical
store or online shops. Online trust is the basic and essential element for building a relationship
with customers. A present research shows that online trust is lower level than the face-to-face
interactions in the physical store (Cassell and Bickmore, 2000), and the result from Cheung and
Lee (2006) shows that trustworthiness of Internet merchant (perceived integrity, perceived
competence, and perceived security control) and external environment (third-party recognition
and legal framework) have considerable impact on consumer trust in Internet shopping (see
figure 1). The trustworthiness of E-commerce web site is very relying on the how much privacy
security can be provided.

An Integrative Model of Consumer Trust in Internet Shopping

Conclusions:
The results have displayed significant relationships between research variables. Perceived ease of
use has a negative influence on perceived risk. Perceived ease of use is positively associated to
perceived usefulness. The outcome of this research suggests that perceived ease of use and
perceived usefulness are antecedents of intention to purchase online. Other factors holding them
back from online shopping include fear of identity and financial theft, product genuineness, lack
of touch and feel, delivery time and fixed price format. Its imperative for online vendors to
understand the factors that may influence the formation of consumers behavioral intention
toward online shopping. Increasing online brand presence may prove to be an effective solution.
Most of the leading brands are either not present online or are present in a very non-friendly
manner. Internet retailers can also increase their clientele by providing significant discounts
across products. Attractive discounts by brands can act as a magnet in motivating consumers to
buy online. Extensive market researches could enable online vendors to identify preferences of
their major customer groups and adjust their website contexts accordingly. Latest technology can
enable creation of attractive catalogues for offers and promotions. Easy going navigational
features amalgamated with multiple payment options and running innovative customer reach
programs could act as mascots for online retailers. Frequently personalized information and
exclusively personalized website could diminish perceived risk to a large extent. This study is
mainly focus on the factors from the Internet and examines those factors that affect the
consumers online shopping behaviors. It starts with the current status of the Internet
development, and mentioned the background of marketing as representation and its difference
with physical stores which in order to show the developing history of Internet shopping since the
E-commerce become popular. In the chapter of literature review, there are three main sections
have been discussed: traditional shopping behavior, Internet shopping and online consumer
behaviors. Each section starts with the concept, and followed by other perspectives. The research
focus on the Internet shopping (include the nature of Internet shopping, E-commerce website,
and online security, privacy, trust and trustworthiness) and online consumer behaviors (include
background, shopping motivation and decision making process). Those factors were looked at,
and examined to reveal the influence at online consumer behaviors. In addition, the previous
researches were used to help researchers understanding more comprehensively.
LIMITATIONS AND FUTURE DIRECTION

It is necessary to recognize the limitations of the current study. Firstly, since the survey was
conducted among a group of respondents from Chandigarh only in India, the results should be
interpreted with caution, particularly with respect to the generalization of research findings of
Indian consumers as a whole. Next, the sample size itself is relatively small. To accurately
evaluate Indian consumers perceptions of online shopping, a larger sample size is desirable.
Future research needs to focus on a larger cross section of Internet users and more diversified
random samples to verify the findings of the current study. Moreover, to further studies clarity of
the factors influence on online shopping, Technology Acceptance Model (TAM) or behavioral
model could be used. Future inquiries could also examine the causal relationships between
factors and how consumers perceive overall online shopping by employing a structural equation
modeling technique. In addition, future research needs to examine business to- business purchase
in the context of cross-national and cross cultural differences.

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