An empirical study on consumer spending patterns on online groceries portals

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The topic focuses on the changing consumer perception and spending on online grocery shopping.

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International Journal of Management (IJM) Volume 6, Issue 9, Sep 2015, pp. 85-92, Article ID: IJM_06_09_009 Available online at http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=9 ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication ___________________________________________________________________________ AN EMPIRICAL STUDY ON CONSUMER SPENDING PATTERNS ON ONLINE GROCERIES PORTALS Dr. Kanje r Hanif Director, Rustomjee Business School Mr. Kizhakkumuri Roshan Ravi Rutomjee Business School ABSTRACT The report consists of a research on ‘Consumer spending on online grocery portals’. The topic focuses on the changing consumer perception and spending on online grocery shopping. It takes into consideration, on an average how much the consumer spends on shopping online?, on an average how many times the consumer visits the online grocery portals?, and is the spending online dependent on income of the consumer. It also takes into consideration the age, gender and educational qualification of the consumer. The test used to analyze this data include the chi test, t test and p test. Key words: Online grocery shopping, Consumer and Online marketing Cite this Article: Dr. Hanif, K. and Mr. Ravi, K. R. An Empirical Study on Consumer Spending Patterns on Online Groceries Portals. International Journal of Management (IJM), 6(9), 2015, pp. 85-92. http://www.iaeme.com/IJM/issues.asp?JTypeIJM&VType=6&IType=9 1. INTRODUCTION The buzz about online shopping in India touches greater heights on a daily basis, with international giants like Amazon entering the frame, along with local players such as Flipkart, Mantra etc. This boom led to the idea of online retail format for groceries. However, shopping for groceries online turned out to be a totally different ball game as compared to other products, Selling of perishable goods is far more difficult as compared to non-perishable goods, as storage and supply turned out to be the major obstacles for online grocery. This problem was tackled by redesigning of the logistical system and warehousing, for quick delivery and better storage. In the past few years India has seen a virtual mushrooming of online grocery portals. Grocery shopping which was once considered a tedious and boring job is soon gaining acceptance among the young and urban Indians due to the introduction of online grocery shopping. Online grocery portals are fast changing the mind-set of the http://www.iaeme.com/IJM/index.asp 85 editor@iaeme.com
Dr. Kanjer Hanif and Mr. Kizhakkumuri Roshan Ravi consumer. Players in the online grocery portal segment include LocalBanya.com, ZopNow.com, Reliancefreshdirect.com, Omart.in, Bigbasket.com and many more, and these numbers go up every quarter with more and more physical retailers looking to get into the fast booming online retail business in India. According to retail consultancy Technopak the online grocery market is growing at 25 to 30 percent across metros and major cities in the country. A survey conducted by the times of India in 2013, showed that the consumer spending on groceries was Rs. 2,630. This amount appears low, but might be realistic because a large majority of Indians live in rural areas, and, also, we have a significantly high percentage of unemployment. The key factors due to which online grocery is catching up with offline retiling are the following.  Increasing broadband Internet and 3G penetration.  Growing Living standards  Availability of much wider product range  Busy lifestyles and lack of time for offline shopping  Increased usage of online categorized sites  Evolution of the online marketplace model with websites like LocalBaniya.com, Big Basket  Discount, promotional offers etc. 2. RESEARCH OBJECTIVE The study was undertaken to  To determine the average spending of the consumer on online grocery portals. o Hypothesis 1: The average spend on online portals is less than Rs. 2,700/- per Month  Ho: The average spend on online portals is greater than/ equal to Rs. 2,700/- per month  Ha: The average spend on online portals is less than Rs. 2,700/- per month o Hypothesis 2: More than 55% of the consumers spend less than Rs. 5000/- month  Ho: More than 55% of the consumers spend greater than/ equal to than Rs. 5000/- month  Ha: More than 55% of the consumers spend less than Rs. 5000/- month  To determine the average number of visits per month to the online grocery websites. o Hypothesis 3: The average number of visits per month is less than 3  Ho: The average number of visits per month is greater than /equal to 3  Ha: The average number of visits per month is less than 3  To understand weather the spending on online shopping for groceries is dependent on income levels of the consumer. o Hypothesis 4: Spending on online shopping is independent of income levels.  Ho: Spending on online shopping is not independent of income levels  Ha: Spending on online shopping is independent of income levels. http://www.iaeme.com/IJM/index.asp 86 editor@iaeme.com
An Empirical Study on Consumer Spending Patterns on Online Groceries Portals 3. RESEARCH METHODOLOGY Research Types: The type of research used in this report is mainly of the formal and quantitative type. Data Types & Sources: The two types of data for this paper were primary data and secondary data. The source for primary data was the questionnaire, while that for the secondary data were internet based sources. Sample Size: We sent out 100 invitations out of which we received 77 responses, out of the 77 responses only 65 responses were relevant, therefore the sample size considered was 65. Analytical Test Conducted: The tests used to analyze the data were the t test (test of means), p test (test of proportion) and chi test (test of independence). In terms of gender the proportion of males is greater than that of females, which means the data is biased towards males.85% of the respondents are above 20 years of age, which is the category that would consider shopping online. This shows that the youth of today is willing to take up this new platform for shopping, having sa id this the strategy for online marketing portals would be to target the youth of the country. Gender Female, 36.30% Male , 68.20% 32% of the respondents fall in the above Rs. 2 lacs per annum category. Thus, the target audience that would shop online is fairly represented. Having said that, if we look at the average monthly spend online, the amount is a measly Rs. 2,700 per month. This indicates that even people below the Rs. 2 lacs per annum income category would be shopping online for groceries. A large 65% of the respondents fall in the graduate category. This indicates their comfort with technology, and willingness to adopt this new channel Income Levels more than 6 4-6 lacs, lacs, 8% 14.70% 2-4 lacs, 9.30% http://www.iaeme.com/IJM/index.asp 87 editor@iaeme.com
Dr. Kanjer Hanif and Mr. Kizhakkumuri Roshan Ravi Hypothesis 1: The average spend on online portals is less than Rs. 2,700/- per month Sample Dummy Variable 1 Variable 2 1,000 2,555 Mean 2555.00 2555.00 Variance 5311509.68 0.00 1,000 2,555 Observations 32.00 32.00 1,000 2,555 Pearson Correlation 2,000 2,555 Hypothesized Mean Difference 0.00 1,000 2,555 df 31.00 1,500 2,555 t Stat 0.00 5,000 2,555 P(T
An Empirical Study on Consumer Spending Patterns on Online Groceries Portals N Null Hypothesis Ho µ ≥2700 Alternate A Hypothesis Ha µ
Dr. Kanjer Hanif and Mr. Kizhakkumuri Roshan Ravi Hypothesis 3: Spending on online shopping is independent of income levels. Observed Data 4–6 Less than 2 more than 6 Grand 2–4 lacs Proportion Spending / Month lacs lacs lacs Total Rs. 0–Rs. 1000/ m 0 3 6 2 11 39% 1000–3000 1 1 4 0 6 21% >Rs. 3000 0 3 7 1 11 39% Total 1 7 17 3 28 Expected Data 4–6 Less than 2 more than 6 Grand 2–4 lacs Spending / Month lacs lacs lacs Total Rs. 0–Rs. 1000/ m 0.39 2.75 6.68 1.18 11 1000–3000 0.21 1.50 3.64 0.64 6 >Rs. 3000 0.39 2.75 6.68 1.18 11 Total 1 7 17 3 28 4–6 Less than 2 more than 6 Grand (Fo-Fe)^2/Fe 2–4 lacs lacs lacs lacs Total Rs 0–Rs 1000/ m 0.39 0.02 0.07 0.57 1.06 1000–3000 2.88 0.17 0.04 0.64 3.73 >Rs.3000 0.39 0.02 0.02 0.03 0.46 Observed Total 3.67 0.21 0.12 1.24 5.24 Chi-squared N Spending on online portals is independent of income levels A Spending on online portals is not independent of income levels T Right tail test T Chi Square A 0.1 P 0.9 C 10.64 DF=(Row-1)*(Column-1) O 5.24 P 0.51 A 0.1 Zo=5. Zc=10 D P value greater than Alpha Accept the null 24 .64 Apparently, income isn’t a factor contributing towards online shopping. This might, also, be attributed to the fact that the typical online spend is less than Rs. 2,700/-, which means that people are spending low amounts online, which is not dependent on income levels. Once consumers get comfortable shopping online, and switch to buying big-ticket items, then income might play a role. A survey conducted by the times of India in 2013, showed that the consumer spending on groceries was Rs. 2,630, this research shows that the average spending on online groceries is less than Rs. 2700, which means that consumer spending on online groceries is approximately the same as offline purchase of groceries. http://www.iaeme.com/IJM/index.asp 90 editor@iaeme.com
An Empirical Study on Consumer Spending Patterns on Online Groceries Portals Hypothesis 4: The average number of visits per month is less than 3 Descriptive Stats t-Test: Paired Two Sample for Means Mean 3.34 Var 1 Var 2 Standard Error 0.28 Mean 3.34 3.34 Median 3.50 Variance 2.49 - Mode 4.00 Observations 32.00 32.00 Standard Deviation 1.58 Pearson Correlation Sample Variance 2.49 Hypothesized Mean Diff - Kurtosis 0.93 df 31.00 Skewness 0.70 t Stat - Range 7.00 P(T
Dr. Kanjer Hanif and Mr. Kizhakkumuri Roshan Ravi The research also found the average number of times the respondents visited the portals were 3.34 per month, which is a significantly low figure considering the site can be accessed via the phone, also the research found that majority of the respondents who prefer to shop online were between the age group of 20–40 . Taking these two factors into consideration the marketing department can use online advertisements to get in more number of visits to the site. Developing apps for the same would also be advised as majority of the consumers were young, which means they are familiar with the technology. Another finding form the research was that spending was independent of income group, this means that consumers from every income group can be target by the online grocery platforms, this shows that there exists a huge market for online grocery platforms. Thus the potential for expansion is tremendous. BIBLIOGRAPHY [1] http://isindexing.com/ [2] http://www.atkearney.in/paper/-/asset_publisher/dVxv4Hz2h8bS/content/a-fresh- look-at-online-grocery/10192 [3] http://www.theseus.fi/bitstream/handle/10024/63912/Belkud%20Ravikiran.pdf [4] Srivastava, N., Srivastava, S. and Dr. Rai, A. K. Attitude and Perception Towards Online Advertising Among Students and Young Professionals: A Study. International Journal of Management (IJM), 5(5), 2014, pp. 33–39. [5] http://economictimes.indiatimes.com/home.cms [6] https://www.localbanya.com/ [7] http://bigbasket.com/ http://www.iaeme.com/IJM/index.asp 92 editor@iaeme.com