Research Report on Failure of Online Retail Marketing

This Research Report Failure Online Retail Marketing study about marketing research and online shopping strategy.

  1. Introduction

    Online shopping is one of most interesting activities on the web. Electronic retailing or Internet retailing is the act of selling goods or services over the Internet. Online shopping is rapidly growing and has become highly predominant in most of the countries. It saves a lot of time and is very convenient during holiday seasons. (Businessdictionary.com, 2013) Online retailing has shown a significant growth inthe retail industry as it provides great opportunities to various consumers. For instance, online retail shoppers do not have any time restrictions to operate online, there are no geographical limitations i.e., they can purchase goods and services from any part across the globe and they offer unlimited varieties of products. Statistical reports prove that the nature of retailing is evolving over the years and that a tenth of the population across the globe use electronic retailing to buy products and services. (Worlwideonline, 2013) There are approximately 627 million users who shop online across the globe according to the report of market research agency AC Nielsen. Retailers are making their presence felt in every channel in order to sustain in the market and gain competitive advantage. (Questionpro.com, 2007) At present, due to time constraints and other benefits, a lot of Indian consumers are shifting focus towards online retailing.

Online shopping has not soaked into the Indian markets when compared to other developing countries. There are a few issues, which hinder the growth and popularity of online retailing in India. These issues will be detected and appropriate solutions will be discussed in the research study.

This Research Report Failure Online Retail Marketing study will deal with the critical analysis of online retailing in India by retrospection of the past, introspection of the present and prospection into the future. The proposal will discuss the reasons, which motivated me to choose this topic area, the possible research questions, which derive out of it and its research methodology. Finally, a project management or the Gantt chart is attached for an effective time management and a critical evaluation of this study.  Thereby resulting in provision of a proposal to the Indian retailers, which state the concerns faced by Indian online users.

Research motivation & questions

Most entrepreneurs had an idea, which motivated them and they further developed. Though they underwent rigorous obstacles and various methods to find the opportunities, which developed their basic idea. However, their journey is incomplete without being either guided or funded. (Cha and Bae, 2010)

India’s economy is rapidly growing in the world and is the fourth largest in the world. Its Gross Domestic Profit (GDP) is $1.29 trillion and is likely to reach $3.36 trillion in the coming years. (World Bank, 2010) This growth in economy is majorly due to the retail industry in India. (Emeraldinsight.com, 2010)The motivation of research is based on the failure of online retailing in India. Even though online retailing is growing, there is not much preference to this type of retailing. Therefore the purpose of this research study is to explore the Indian shopper’s relation to online shopping. This is executed by researching the identification of the shopping orientation.  It will also deal with the behavior of the online shoppers. This will result in examining and understanding the nature of Indians for online shopping. It will also provide solutions to overcome the possible problems, which are faced by the online shoppers in India.

Research question: Why has online retailing failed in India?

From this hypothesis, a few questions have arise:

  1. What are the problems faced by the online consumers in India?
  2. What are the ways for Indian online retailers to improve online sales and gain consumer confidence?
  3. Is there a future for online retail in India?

Desired outcomes

When the research examination is complete, there are a few outcomes, which are anticipated. They are as follows:

  • To understand the online retail market situation in India. A new concept usually takes time to settle in and be accepted by the Indian public.
  • To understand the problems faced by Indian online users, whichhinder the popularity of online retailers.
  • To understand and examinethe researched problems by means of appropriate solutions for the future potential of online retail trade in India.
  • Proposal of viable solutionsto the online retailers in India.

Background information

Online retailing in india:

Electronic shopping in India seems to be on the verge of growing with the interest of Indian retailers making serious efforts to innovate in related fields in order to gain a competitive advantage in the existing market. Many efforts are under process to gain consumer confidence and to get them out of the stereotypical style of shopping (physical store shopping) and direct the consumers towards online retailing in all fields i.e., online shopping for fashion, entertainment, food, grocery, lifestyle and travel. However according to current reports in India, online retail marketing accounts to less than 1% of the total retail sales. (Rncos.com, 2012) In 2013, the scene in online retailing seems to have changed with hundred million Indian users purchasing online. Atpresent, there are 8 to 10 million users and the research centers predict that Indian users in 2015 is going to go up to 40million provided the consumer’s confidence is gained by the online retail market. (Papers.ssrn.com, 2013) The youngsters majorly drive around 75% of the Indian users usually between 15-34 years. (Papers.ssrn.com, 2013) India is one of the rapidly establishing markets among the BRIC nations, marking an annual growth rate of 41% with approximately eighteen million users. (Papers.ssrn.com, 2013)

Major electronic retailers in india:

There are few major electronic retailers in India. Although Amazon and EBay are doing fairly well, they are not very much accepted by the Indian users. There are many Indian online retailers who have gained a significant position in the market. For instance, Saholic.com, Indiatimesshopping.com, naptol.com, yebhi.com etc. are firms, which are funded by the venture capitalists. Besides there are also online stores which are specially designed for particular items for specific users such as home-lifestyle items at Homeshop18.com, watches at watchkart.com, health items at healthkart.com etc. (Papers.ssrn.com, 2013) Finally there are few dominant online retailers in India and they are as follows.

Flipkart.com:

Flipkart is India’s largest online retailing company with a net worth of $92 million. It was started by two alumni of IIT (INDIAN INSTITUTE OF TECHNOLGY) and is famously known as India’s EBay. Flipkart deals with books, accessories, clothing and other items. Flipkart took over few small Indian online firms like the mime360.com, chakpak.com, letsbuy.com and many others to cater all sections of the society with various products and services. Flipkart provides additionalservices like a thirty-day period for return, cash on door delivery and equated monthly installment (EMI) options. (Papers.ssrn.com, 2013)

Research Report on Failure of Online Retail Marketing

 Myntra.com:

The alumni of IIT started Myntra in the year 2007. Its unique quality was that it aggregated a combination of multi-national brands under one roof for every season. It gave the Indian online shoppers the global choice of selecting various leading brands of merchandise on one platform. The customer service is widely appreciated and keeps abreast of the latest trends across the globe. (Papers.ssrn.com, 2013)

Research Report on Failure of Online Retail Marketing

Jabong.com:

Around 60% of the Indian population falls under the middle class – upper class segment. Jabong caters to this section of the society and deals with merchandise, accessories and services. It did not deal with high-end brands but dealt the best for the upper class range. Jabong was a phenomenal success as soon as it launched as it promised delivery within 24 hours. Their aspects of technology were similar to that of Myntra. (Papers.ssrn.com, 2013)

Research Report on Failure of Online Retail Marketing

The drivers for the recent growth of electronic retail market in india:

There are a few key factors, which drive the growth of online retailing in India.

  • The Indian youth is increasingly adapting to the electronic retail market. (Questionpro.com, 2007)
  • There is a significant increase in the credit and debit card users in India. (Questionpro.com, 2007)
  • It is time saving as the Indian working class is growing and has a restraint in their personal leisure time.(Questionpro.com, 2007)
  • The ease of online in searching products or services and competitive prices has marked an increase in growth of retail in India. (Questionpro.com, 2007)
  • Accessibility to Internet and personal computers in urban and rural areas.(Papers.ssrn.com, 2013)
  • Online retailing provides the consumers with convenient payment options.(Papers.ssrn.com, 2013)
  • E-commerce management provides additional facilities like discounts on the manufacturing price and free packaging.(Papers.ssrn.com, 2013)
  • The consumers can base their purchasing decisions on testimonials, feedback left by clients and endorsements.(Papers.ssrn.com, 2013)
  • The consumers get competitive prices as they can compare with various other online retail sites and flinch the best deal.(Papers.ssrn.com, 2013)
  • As there is no time limit, consumers can buy whenever it is convenient for them.(Papers.ssrn.com, 2013)
  • There is very less investment cost in advertising for e-commerce as there are various free social networking sites.(Papers.ssrn.com, 2013)
  • The return policy is very convenient for Indian users, as most online sites do not ask any questions, simply click the option ‘return’ if the product is not satisfactory.(Papers.ssrn.com, 2013)

The anticipated reasons for failure in online retail in india:

There is no transaction security when purchases are made online. There are issues in security as one is not sure if the online retail website guarantees a genuine and authentic transaction. Besides there are added problems with the fulfillment of such online transactions.

  • There is lack of technology and skills. Not all Indians have personal computers and Internet at home. Even if they do, some lack technological skills to operate them.
  • There is Illiteracy in India, which hinders access to technology. 30% of the Indian population is Illiterate. (Indiaonlinepages.com,2013)
  • A major problem faced by the consumers is that they cannot physically verify the product. Hence, risking a transaction online is not worth the money.
  • Not many people use credit or debit cards in India. Online transactions are based only through transfer of money by the means of debit or credit cards.
  • Another problem faced by the online consumers lies in their belief of past experiences. If the past online transactions of users have failed due to various reasons, it might act as a mental block.
  • There maybe lack of awareness among the people. Consumers living in small cities or rural areas maybe unaware of such facilities.
  • Many youngsters are the reason for the popularity in online retailing in India. If the family is cynical of such technical facilities and don’t allow their kids to transact online. Such social or cultural factors can hinder the growth of online retailing in India.
  • The shipping costs in online retail market are high. At times they are more expensive than the product.
  • The return policies of most online sites are dangerous. If they customer is dissatisfied with the product and there is no return policy, it might not encourage the buyers to transact online.
  • There are language barriers as most online retail sites use English as the medium of communication. But English is not suitable to majority of the Indian population.
  • The online retail market lacks the personalized customer needs whereby the consumer can get products altered or customized. This is a major reason for the failure of online retailing in India.

Literature review

What is retailing?

Retailing can be defined as “A commercial transaction in which a buyer intends to consume the good or service through personal, family, or household use.” (Businessdictionary.com, 2013)

Research Report on Failure of Online Retail Marketing

Retailing is basically the trade of products or services with price to consumers either for their personal use or family use. Retail stores have various types and formats. (Retailmarketing, 2010) They are:

  • In-store retailing
  • Branded stores
  • Departmental stores
  • Specialty stores
  • Super markets
  • Hyper-mart
  • Discount stores
  • Convenience stores
  • Shopping malls
  • Non-store retailing
  • Direct marketing
  • Automated vending
  • Online retailing

What is online retailing?

Online retailing can be defined as, “The sale of goods and services through the internet.” (Investopedia.com, 2013) Electronic retailing can refer to online trade between business-to-business or business to consumer. The electronic retailing generates revenue from the sale of goods and services by means of advertising, website content and subscriptions. In 1991, when Internet was made publicly accessible, Electronic retailing was introduced. Since then many business deals have been struck my means of websites. (Papers.ssrn.com, 2013)

Online retailing in India is not as successful as it is worldwide. It is not widely accepted by the Indians, as it was a new concept introduced. Online retail has shown steady improvement in its growth in the retail industry. The users who transact online prefer online retail because of its convenience, easy usage and door delivery of all goods and services from electronics to merchandise. However, grocery online retailing is not yet introduced in India. (Internetretailers, 2012)

Website design and nature of online shopping:

Gilly and Wolfinbarger introduced the concept of online shopping when the Internet was let for public use. According to an empirical study by the duo, online shopping was easy to access, gives apt information, and provides extended selection and trade without personal contact. They also discussed the dimensions of a website design which are availability of information, good/service selection, utility and suitable personalization, consumer service, secure/private and reliable. (Wolfinbarger and Gilly, 2003)

Research methodolgy

Research methodology is the process in which various methods are used to collect data for the purpose of reaching the desired outcome of an effective research report. The use of deductive analysis by means of primary and secondary research will be followed for the study of online marketing in India.

Data collection& analysis

 Primary data:

  • Questionnaires: This research instrument provides a series of questions to respondents who live in India for the purpose of understanding the problems faced by the users during online shopping. As online retailing is majorly used by the youth, the questionnaires will be given to respondents ranging between 16 to 35 years of age. A maximum of 150 questionnaires will be issued for analysis. The questionnaire will follow a mixture of both open-ended and close-ended questions to get a complete analysis of data. It will be analyzed by using SPSS statistical software. A few related questions that can be asked are:
  1. Is it convenient to shop at home?
  2. Are prices cheaper online than in a store?
  3. Is it easy to locate the required products online?
  4. Does a physical store have a wider range than online retail?
  5. Is physical verification of the product important before purchase?
  • Interviews:This research tool will be conducted to online retailers and online users/non-users in India to understand the scenario from the retail industry’s point of view as well as the customer point of view. Personal interviews with online traders in India are a tedious task, therefore Skype interviews or telephonic interviews are also considered. This will help in providing a detailed understanding and to come up with sensible solutions for a successful research study.

Secondary data:

  • Internet: Data regarding the online retail sales and the detailed study of the Indian retail marketing literature review will be researched by means of Internet. Various online journals, PDF’s, websites, blogs, archive materials, videos, Government statistical reports etc. will be helpful in collecting data. Personally collecting information by going place to place is a nuisance; online libraries are of much help these days for data collection and data analysis.

 Limitations of the study

There will be various limitations, which are anticipated during the research. A few of them are:

  • Due to distance issues, interviews will take place only through Skype, e-mail or telephonic conversations.
  • For telephonic interviews, the receiver may not understand the question in the required manner. Accent issues and environmental disturbances may happen.
  • Questionnaires will not produce the exact result, as not all respondents will give a candid reply.
  • Few lazy respondents may show disinterest and may answer questions randomly without reading.
  • For interviews and telephonic conversations, due to time difference, the availability of the interviewee may be an issue.
  • The response and data will depend on the mood and other factors affecting the respondent.
  • The respondent for questionnaire will be biased as it’s within an age range of 15 to 35 years. The data may not be completely true.

Project planning / Gantt chart

Research Report on Failure of Online Retail Marketing
Gantt Chart

Cost analysis:

  • ISD calls to India for telephonic interviews – £30
  • Transportation cost for data collection – £30
  • Questionnaire stationery – £20
  • Printing charges – £20

TOTAL ESTIMATE = £100

Refrences & bibliography

  • Businessdictionary.com (n.d.) What is online shopping? definition and meaning. [online] Available at: http://www.businessdictionary.com/definition/online-shopping.html [Accessed: 3 May 2013].
  • Cha and Bae (2010) THE ENTREPRENEURIAL JOURNEY. high technological management research, (21), p.31-42. Available at: http://www.sciencedirect.com/science/article/pii/S1047831010000064 [Accessed: 1 may 2013].
  • Emeraldinsight.com (2010) Emerald | International Journal of Retail & Distribution Management | Volume list. [online] Available at: http://www.emeraldinsight.com/0959-0552.htm [Accessed: 3 May 2013].
  • Indiaonlinepages.com (2013) Literacy Rate in India- Indian Literacy Rate 2013- Literacy Rate of    India. [online] Available at: http://www.indiaonlinepages.com/population/literacy-rate-in-india.html [Accessed: 3 May 2013].
  • internetretailers (2013) Industry Statistics – India’s online retail market could double in size –  Internet Retailer. [online] Available at: http://www.internetretailer.com/2013/01/11/indias-online-retail-market-could-double-size [Accessed: 3 May 2013].
  • Investopedia.com (2013) Electronic Retailing (E-tailing) Definition | Investopedia. [online] Available at: http://www.investopedia.com/terms/e/electronic-retailing-e-tailing.asp [Accessed: 3 May 2013].
  • Papers.ssrn.com (2013) A Study of the Online Retail Market with Respect to India vis-à-vis the United States of America by YuvrajSamant :: SSRN. [online] Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2231623 [Accessed: 3 May 2013].
  • Questionpro.com (2007) A Study of theOnline Retail Industry In India.. [online]