Research Paper
IJBER 2010 Vol 4: 83-91
International Journal of Business & Engineering Research
A Study on Internet Usage Pattern with Special Reference to B2c E-Commerce in Rajasthan Sumangla Rathore School of Management, Sir Padampat Singhania University, Udaipur
[email protected]
Abstract: Internet shopping in a developing nation such as India is still a nascent activity, hence analysing the usage pattern of Internet is extremely important to understand the present status of Internet usage as a buying medium; particularly in state like Rajasthan, where this phenomenon has yet to gain momentum. It can be emphasised that the Internet usage pattern holds great significance for e-marketers in order to plan online interactions with potential customers. The place of access of Internet or the number of hours spent on Internet can determine the likelihood of an individual for online transaction. It also helps the marketers to devise a marketing strategy that suits the requirements of Internet users who are the ultimate prospects as online buyers. The online shopping process involves several activities ranging from information search to making payments. However in case of Internet shopping the nature of all these activities differs from offline buying, since availability of information sources is vast and free or at a very low cost. Thus, an attempt has been made in this study to understand the behaviour and preferences of Internet buyers in terms of their Internet usage. Key words: Internet, Internet usage, e-commerce, online buyers. 1. Introduction Information Technology (IT) is considered to be one of the greatest inventions of the modern era. What just instigated as a broad term encompassing the various areas like software applications, computer hardware, information databases and complex computer networks, has now skyrocketed to huge dimensions and is now touching human lives in a manner that has revolutionized the way of living and the way businesses are conducted (Rathore, 2009). Experts often remark that the advancements and developments which have taken place in the past 5 years are more than the development of past 5 decades taken together in terms of impact, implementation and adoption; and Internet has been the most effective and remarkable of these. The Internet has been describes as a global computer network linking together millions of smaller networks all over the world by using standard protocols to exchange information (Bill Gates, 1995). When this network of networks began its growth in December 1991, it had about 10 servers and in January 2004, the Internet was estimated to have over 46 million connected servers with a sustained growth rate in excess of 1 million servers per month (O‟Brien and Marakas, 2007). The latest statistics indicate that the worldwide penetration (% of population) of Internet usage has increased to 26.6% (www.internetworldstats.com, 2010). The large scale adoption of Internet, due to its 24x7 nature, has not only brought the world closer together, but it has also allowed the world's economy to become a single interdependent system. The Internet has become the largest marketplace in the world, drawing customers into a world-
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wide market of goods and services (Fulbright, 2010). With the latest advancements in the Internet technologies, the Internet today is more interactive; allows easy social interactions through participation and collaboration from a variety of human sectors; responds more immediately to users' queries and needs; is easier to search; and provides a faster, smoother, realistic and engaging user search capability, often with automatic updates to users (Kim et al., 2009). These characteristics of Internet have led marketers view Internet as an easy and cheaper mechanism for businesses to communicate electronically with the outside world, including their customers, suppliers, channel members and other general public. Michael E. Porter (2001) has defined the Internet as “an enabling technology, a powerful set of tools that can be used, wisely or
unwisely, in almost any industry and as part of almost any strategy”. The Internet has also brought about a significant impact on the consumer behaviour. The consumer today has become far more demanding, and marketers are relying on Internet and related technologies so as to gain efficiency in their operations and compete globally. The foremost concern for a business prior to adopting online mode is to identify the behavior of cyber customers. It also includes identifying the extent of their Internet usership and usage pattern. A firm targeting its consumers would be interested in knowing the ratio of those buyers who carry out transactions online so that based on understanding of their usage pattern it may plan its interaction with them. Carrying out an online transaction involves establishing personal rapport and gaining mutual trust. All these issues can be addressed through a series of planned and monitored interactions and understanding of consumer‟s wants and purchase patterns. According to a study (Source: Admap July/August 2000) a majority of purchases over the Internet take place for books, travel, financial services, software, PCs and gifts. The subsequent studies (Source: Nielson-global, 2007) also revealed that about 41 percent of global online purchases are for books, followed by Clothing/accessories/shoes (36%), Video games/DVD (24%), Airline tickets /rail tickets/ hotel room reservations (24%), Electronic items (19%), music (19%) and so on. In spite of having numerous statistics on the products purchased by online consumers all over the world, there is a dearth of research that can identify the most preferred products or services by the Internet shoppers in India. Being an upcoming phenomenon in a developing country like ours, it is an important decision for the firms venturing into cyber retailing that what they should offer to their prospective customers. At the same time it is important to understand the nature and behaviour of Internet users who are the most probable buyers for online firms. It has been emphasized by most of the researchers that demographics play an important role in shaping the online consumer behavior. Bhatnagar (2007) studied the demographic determinants to show that the demographic profile of individuals who shop online for personal reasons is different from that of those who shop for professional reasons. This research indicated that individuals with children, high incomes, and large internet experience are more likely to shop online for personal purposes and younger men with large internet experience are more likely to shop online for professional purposes. Li et al. (1999) have concluded that the buyers that shop more frequently on Internet are more convenience oriented. Another study conducted by Sorce, Perotti and Widrick (2005) examines the shopping and buying behavior of younger and older online shoppers. For this purpose, they surveyed over 300 students and staff from a US university regarding their online shopping and buying experiences for 17 products. It was found that while older online shoppers search for significantly fewer products than their younger counterparts, they purchase as much as younger consumers. Age explained more variance in purchasing behavior if the consumer had first searched for the product online. Park and Jun (2003) have performed a cross-cultural study to examine differences in Internet usage, Internet innovativeness, perceived risks of Internet buying behaviors between Korea and America.
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Although globalization is leading to a convergence of cultures, according to Costa and Bamossy (1995) there continue to be clear differences in what these behaviors mean to the individuals and groups of different cultures (as cited by Park and Jun, 2003). A similar recommendation has been made by Lee (2010) who has provided empirical evidence that demographic factors no longer influence the perceptions of e-commerce benefits and e-commerce adoption. However, in light of the findings of his study, the author suggests that future research should examine different countries and/or different cultural environments as potential sources of variation in e-commerce adoption. According to a study conducted by Zinnov offshore research and consulting (2006), e-commerce in India is gaining popularity among Indian customers due to facilities such as “home delivery”, “time saving”, “24x7 availability”, “ease of use‟ and “product comparison features”. No geographical barriers and best offers in the form of Equated Monthly Installments are also adding to the Customer pull. However, in order to further build confidence amongst the online buyers regarding legal aspects of online buying, the government must strengthen its existing legal framework (IT Act, 2000) in context of electronic commerce(Ahmad, 2009). It can be emphasised that the Internet usage pattern holds great significance for e-marketers in order to plan online interactions with potential customers. The place of access of Internet or the number of hours spent on Internet can determine the likelihood of an individual for online transaction. It also helps the marketers to devise a marketing strategy that suits the requirements of Internet users. Internet shopping in a developing nation such as India is still a nascent activity and hence analyzing the usage pattern of Internet is extremely important to understand the present status of Internet usage as a buying medium. The online shopping process involves several activities ranging from information search to making payments. A consumer before buying a product tends to compare the several alternatives by collecting more information and seeking opinions of others, however in case of Internet shopping the availability of such information sources is vast and free or at a very low cost. Hence an attempt was also made to understand the different sources of product related information on Internet and the products that are mostl y bought on Internet. Hence this study aimed at understanding the usage pattern of Internet while targeting following objectives: 1. 2. 3. 4. 5.
To study the demographics of Internet users. To identify the most commonly used place for Internet access (home/office/cyber cafe). To find out the purpose of Internet usage. To understand the preferred sources of information for Internet buying. To understand the shopping and payment preferences on Internet.
2. Materials and Methods 2.1 Research Design: As the study aimed at studying the perceptions and characteristics of web shoppers, descriptive research design was considered. Since the study is concerned with a sample of elements from a given population, the present study can be further categorised under cross-sectional descriptive study (Beri, op cit p). In order to gather information about the behaviour, demographic and lifestyle characteristics of the Internet shoppers, survey method was found to be most appropriate. A structured pre-tested questionnaire was used as research instrument. Almost all questions in the questionnaire were close-ended. The possible alternatives were pre-specified and the respondents were asked to choose from the given alternatives. The questions in the questionnaire followed a pre-defined pattern and flow. As this study was aimed at studying the Internet usage pattern, it was decided to collect data from the four largest cities of the state that are growing and the customer is more informed and updated. Hence, all online shoppers from four major cities of Rajasthan, namely Jaipur, Jodhpur, Kota and Udaipur formed the universe of the study.
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For the purpose of this study, Internet buyers having at least three transactions on Internet in a year were considered for inclusion in the sample. 2.2 Sampling unit and Respondents Purchase decisions are generally individual decisions rather than a household decision, therefore instead of households individuals were considered as sampling units. Accordingly, individuals buying any consumer durable or non-durable product or service like air/ rail travel/ health care/ education on Internet were treated as respondents for the study. Initially it was planned that 300 online buyers (75 from each city) will be included in the sample. Considering the fact that Internet buying is not a common practice in India, it was assumed that many cold calls will have to be made to find the one who actually buys on Internet. Therefore, about 150 persons from each city, making up a total of 600 were contacted. About 50 percent of the individuals contacted didn‟t qualify for inclusion in the sample because they were not regular buyers (not having the minimum three internet transactions in a year) on Internet. At the end of the fieldwork 318 filled in questionnaires were collected. At the time of data entry 34 questionnaires had to be rejected for being incomplete or inconsistent responses. Finally 284 filled in questionnaires formed the basis of this study. 3. Results and Discussions 3.1 Data Analysis 3.1.1 Demographics About 86.6 percent respondents were below the age of 35 years and remaining 13.7 percent were above 35 years of age. The sample was biased in favour of younger people because most Internet users are young in age. Very few people above the age of 56 years really use Internet for shopping. About 82 percent sample respondents were male and 18 percent were female. The sample was again biased in favour of male population. This is mainly because during the fieldwork it was found that female respondents were more skeptical in providing certain data needed for the study than male respondents. More than 50 percent respondents were having undergraduate or postgraduate degrees in general stream. About 41 percent respondents possessed undergraduate or postgraduate degrees in professional courses like engineering, pharmaceutical science, computers and management. Only 8.5 percent respondents were non-graduates. A very large number of respondents i.e. 48.6% have a monthly household income of less than Rs 20 thousand and about 38.8 percent fall in the income bracket of 20 to 40 thousands per month. The percentage of respondents having a monthly income of more than Rs 40 thousands is only 12.5. However, out of the total valid sample size of 284 about 13 percent refused to talk about their monthly household incomes. About 33 percent of the respondents were unmarried and 67 percent were married. The qualitative data collected during the fieldwork revealed that mostly it is the young family member who is net savvy and places orders on Internet. 3.1.2 Internet Usage Pattern The study revealed that about 29 percent Internet users use it for less than an hour in a day. Another 24 percent use the Net for one to two hours, 25 percent for three to four hours and the remaining 22 percent use for more than three hours a day. The qualitative information collected during the fieldwork reveals that people using Internet only for sending and receiving mail and paying bills etc spend less time on surfing as compared to those who use it for information search, stock trading or shopping. Further, it was found that about 72 percent respondents are regular users of Internet. They use it almost every day. About 22 percent are frequent users surfing the Net at least once or twice a week. The remaining 6 percent are occasional users using the facility very sparingly. The study revealed that about 45 percent respondents access Internet from their homes, about 39 percent use Internet at cyber cafes, and another 35 percent respondents access Internet from their offices. The total is more than 100 percent because of overlapping categories, meaning that many respondents access Internet from homes as well as
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from their offices. People use Internet at cyber cafes when the facility is not available at home or at work place. Majority of respondents using Internet at cyber cafes are young people below the age of 20-25 years. The qualitative information collected during fieldwork revealed that people may access internet from their work places to book rail or air tickets, or to pay bills but they are not likely to purchase garments, books, electronic gadgets or any other product from their workplace. It implies that purchase of tangible products through Internet is likely to increase with the rise in Internet penetration in the households. A cross tabulation between age and average time spent on surfing revealed that respondents below the age of 35 years use Internet more frequently as compared to the people in higher age groups. The following chart indicates the Internet use for different purposes:
Email Searching Shopping Reading Paying bills Recreation Any other information news purpose Chart 1: Purpose of Internet Usage The data clearly indicates that shopping is not the most preferred use of Internet in India. 3.1.3 Online Product Preference and Information Search Earlier it was found that about 39% Net users use it for shopping. Therefore, next we wanted to know what Internet shoppers really buy through this mode. Chart 2 presents this information.
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Chart 2: What is bought on Internet? The chart indicates that maximum number of people (56%) use Internet for booking rail tickets, followed by banking transactions (36%), purchase of air tickets (33%) and books (32%). About 30% Internet shoppers use it for online trading of shares. Other important items bought online by the Net Shoppers are, Music (27%), computer software which includes gaming and antivirus software (23%), gifts, flowers and greeting cards (20%), online magazines (19%), low priced electronic gadgets (16%) and educational programmes (16%). The total is more than 100 because of overlapping categories. Unlike foreign countries very few people in India buy personal computers, apparels, health care products, insurance policies and real estate properties on the Net. A very small percentage of the Sample was found to be using Internet for some other purposes like making international phone calls, distance learning and social networking. Most of the aforesaid categories are overlapping indicting that people use Internet for more than one purpose. Those who buy any product or service on Net, wherefrom they get the relevant information about that product or service was another important question asked to the respondents. The data collected from the study are presented in the following chart (Chart 3).
Chart 3: Sources of Product Information The most important source of product information for the Internet shoppers is various search engines, about 87 percent shoppers use these search engines to collect relevant information about
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the product or service. Other important sources of information are, company‟s website (56%), friends, colleagues and family members (46%), catalogues (30%) and advertisements in different media (24%). Emails (21%), blogs (13%) and word of mouth are some other sources of information. It is evident from the table above that search engines and company websites are the two most important sources of information for the cyber shoppers. Any B2C marketer should take care of these two sources to inform the potential buyers about its offerings. 3.1.4 Internet Shopping It was found that only about 18.6 percent Internet users buy products and services regularly or frequently through Internet. 29.2 percent buy only occasionally, may be like booking a rail or air ticket; and 36.3 percent buy very rarely. About 16% respondents said earlier they might have bought but now they do not buy anything on Internet. About 34 percent respondents said that money spent on Internet shopping depends on the type of purchase made by the individual. If someone purchases an air ticket the cost is bound to be high as compared to the cost of a rail ticket or an insurance premium. Therefore, they argued that it is difficult for them to give some „average‟ monthly expenditure figure. However, about 31 percent respondents said their monthly expenditure on Internet is more than Rs 6,000 a month. Interestingly the remaining 69 respondents are almost equally distributed among four categories ranging from less than Rs 500, to 500-1000, 1000 to 3000; and Rs 3000 to 6000, in terms of their monthly expenses. About 34.5 percent respondents showed their inability to give some specific figure as „average‟ monthly spending on cyber shopping. The main argument in this regard was they may not buy anything for several months and then they may go in for multiple transactions in a span of few days, therefore it is not possible to give some estimate in this regard. The study revealed that about 58 percent respondents prefer to pay by credit card followed by 31 percent by net banking, 30 percent by debit card and 29 percent by cash at the time of delivery of the product. Remaining 10 percent may pay by demand draft or cheque. The total is more than 100 percent because of overlapping of categories. It clearly indicates that payment through credit/ debit cards is the most preferred mode for cyber shoppers. Net banking and e-cash are yet not very popular in the country. The qualitative information collected during the fieldwork suggests that most people are skeptical about use of credit card or even e-banking while buying from an unknown cyber vendor. 3.2 Conclusions 1. It was observed that Internet usage is becoming a regular activity. Majority of Internet buyers are regular users of Internet; using it every day. This further reiterates that regular Internet users are easy targets for Internet shopping. The study reveals that the average time spent on Internet by these regular users is 3-4 hrs a day. People using Internet mainly for sending and receiving e-mail and paying bills etc spend less time on surfing as compared to those who use it for information search, stock trading or shopping. 2. Internet buyers prefer to use Internet at home more than cyber café or office. This might be because of security reasons in cyber café or network firewalls in office. This can act as an impetus to research on family shopping habits, which will enable the businesses to prepare the right mix of products and offers to suit the family shopping habits. For instance children constitute an important target market segment and merit attention from a marketing perspective. The role that children play in making decisions concerning certain purchases can be harnessed to target a sale. The amount of influence exerted by children varies by product category and stage of the decision making process. For some products, they are active initiators, information seekers, and buyers; whereas for other product categories, they influence purchases made by the parents. Thus this finding opens a flood gate for related researches on family shopping habits. 3. Age is also a determinant in the usage of Internet. It was found that young people are more regular users of Internet than people from higher age groups. 4. Along with the frequency and place of Internet access, it is also important to understand the nature
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of activities performed using Internet. It was found that sending and receiving mails remain the most common use of Internet, followed by searching information. Email is the most widely used Internet application and is perhaps the most common form of communication as well. The vast resources of information that are freely and instantly available on Net coupled with efficient search mechanisms of powerful search engines make Internet a primary source of information search also. This finding creates a tremendous opportunity for online marketers to convert the information seekers into buyers. Emails and search engines can act as infomediaries, to direct customer traffic to the e-commerce website. Online marketers should focus on new marketing tools like Search Engine Optimization (SEO) service , Search Engine Submission, Pay Per Click (PPC) advertising, placement and management in major engines such as Google, Bing and Yahoo, email advertising and reputation Management (aka Negative Suppression Service) which helps companies eliminate or reduce the damage caused by negative Internet postings that rank highly on search engines. 5. However Internet shopping is also gearing up as a popular activity was concluded from the fact that shopping emerged as the third popular activity on Internet after emails and information search. This also creates a tremendous opportunity for online marketers to convert the information seekers into buyers. Other than buying products and services, Internet users are using Internet as a timesaving medium for paying bills and other related monetary transactions. The other uses of Internet include recreation, watching videos, listening to music, education, health services, social networking and stock trading. 6. The Internet shopper tends to exhibit a different product preference online, since his choice and selection criteria for products differ from an offline shopper. Rail ticket booking is the most common online shopping conducted by Internet shoppers followed by online banking, air tickets and books respectively. Online share trading is another popular activity on Internet. It was observed that online shoppers mostly bought services. Even those who went for products, shopped for low priced products only. This finding can enable the firms to prepare the right mix of products which will suite the customer needs and preferences. Service providers can take delight from this and can prepare to offer a wider range of associated services. Firms offering products other than aforementioned can take a cue from this finding and can prepare an appropriate marketing strategy to target the online shoppers. Internet is also used for buying intangible and downloadable products such as music, computer software, greeting cards and online magazines. Buyers also shop for gift items, low priced electronic gadgets and educational programs online. The study concludes that unlike foreign countries very few people in India buy personal computers, apparels, health care products, insurance, and real estate properties on the Net. A very small percentage of the Sample was found to be using Internet for some other purposes like making international phone calls, distance learning and social networking. Most of the aforesaid categories are overlapping indicting that people use Internet for more than one purpose. As indicated by studying the Internet usage pattern, information search is an important activity on Internet. Hence it is understandable that Internet shoppers would also search for product information online before making a purchase decision. The study also supported this fact by concluding that search engines are the most preferred source of product information on Internet. Internet shoppers also explore company‟s website for more product related information and updates. Friends and family, product catalogs, advertisements, emails, blogs and word of mouth are the other sources which are considered for seeking information but are less popular as compared to search engines and company websites. This conclusion also has an implication for marketers in terms of focusing on Search engine Optimization methods to and providing a better and attractive interface to lure the Internet users visiting their websites customers. 7. It was observed that although Internet is becoming poupular amongst the masses, but not all Internet users shop regularly on Internet. Still in India Internet shopping has not emerged as a regular activity and most of the buyers use Internet as a shopping channel occasionally.
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8. The amount spent on Internet shopping varies according to the product/service purchased online. The responses to this question varied from Rs.500 to Rs.6000 per month. 9. The study revealed that the most popular mode of payment on Internet is through credit cards followed by net banking, debit cards and cash on delivery. In recent years, advancements in the security mechanisms for electronic transactions have contributed to the increased usage of cards for online payments. The recently launched programs Verified by Visa and Mastercard Secure require an additional level of authentication for all card transactions. This is in accordance with the Reserve Bank of India‟s directive that has made it mandatory for all card transactions to have an additional level of security in the form of a pin/password over and above the information available on the physical card. The traditional payment options like demand draft or cheque remain the least popular methods both for buyers as well as marketers. The Internet users are the probable buyers, and these buyers prefer to pay online through credit cards/ debit cards and other online means of funds transfer. Banks and financial agencies can target these internet users to promote their credit cards/ debit cards and funds transfer services. These users act as a niche market for aforementioned services. References: [1] Ahmad, F. (2009). Electronic Commerce: An Indian Perspective. International Journal of Law and Information Technology, 9(2), 133-170 [2] Beri, G.C.(2008). Marketing Research4e. New Delhi: Tata McGraw Hill Publishing Company. [3] Bhatnagar, A.(2007). Do determinants of online shopping differ for personal shoppers and professional shoppers?. EuroMed Journal of Business. 2(1). 87 - 102 [4] Fulbright, J.(2010). The Internet and E-COMMERCE. Gifts & Decorative Accessories, 111(5), 48-54 [5] Gates, B.(1995). The Road Ahead. Harmondsworth, Middlesex, UK: Penguin Books Ltd., pp.91 [6] http://www.internetworldstats.com/stats.htm, retrieved May 27, 2010. [7] Kim J.D., Yue, K., Hall, P.S. & Gates, T.(2009). “Global Diffusion of the Internet XV: Web 2.0 Technologies, Principles, and Applications: A Conceptual Framework from Technology Push and Demand Pull Perspective,” Communications of the Association for Information Systems, 24, Article 38 - Available at: http://aisel.aisnet.org/cais/vol24/iss1/38 Lee, J.W.(2010). The roles of demographics on the perceptions of electronic commerce [8] adoption. Academy of Marketing Studies Journal (2010, January 1). Retrieved September, 01, 2010,from [9] http://www.thefreelibrary.com/Academy+of+Marketing+Studies+Journal/2010/January/1[10] p52516 [11] Li, H., Kuo, C. & Rusell, M.G.(2006, Jun). The Impact of Perceived Channel Utilities, Shopping Orientations, and Demographics on the Consumer‟s Online Buying Behaviour. Journal of Computer-Mediated Communication.5(2). Retrieved July,1,2009, from http://www3.interscience.wiley.com/cgi-bin/fulltext/120837782/HTMLSTART [12] O‟Brien, J. & Marakas, G.M.(2007). Management Information Systems. New Delhi: Tata McGraw Hill [13] Park, C. & Jun, J.K.(2003).A cross cultural comparison of Internet buying behavior Effects of Internet usage, perceived risks, and innovativeness. International Marketing Review, 20(5), 534-553 [14] Porter, M.E.(2001). Strategy and the Internet. Harvard Business review, March, p.64 [15] Rathore Sumangla(2009), IT in 2010 and Beyond: Major Issues and Challenges, Synergy, Vol.11(2), pp 118-123
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