E Retailing in Developing Economy A Study on Consumers' Perceptions
INTRODUCTIONThe internet with innovative business practices has a huge potential as a shopping channel, as it allows a totally different and convenient shopping environment to its consumers. Although internet retailing/e retailing is gaining acceptance among consumers, the acceptance rate is not as high as that in developed economies. As per report by Internet and Mobile association of India (IAMAI, 2013) out of 137 million Internet users in the country, only 25 million of them shop online. Moreover, 70 of the entire market is captured by online travel sales division (IBEF report, January 2013) The Indian online retail market counts meagerly for only 0.1 of the total retail sales. This number is surprisingly low as compared to online retail penetration. On contrary the huge acceptance of online travel products infers that Indian consumers are not only less skeptical in purchasing these services online but also associate them with various benefits.A consumer perceives several factors into consideration before deciding a particular purchase action. As per a model proposed by Bhatnagar Ghosh (2004) a consumer compares perceived risks and benefits associated with a purchase decision to calculate his expected utility from the purchase and will make a purchase decision only when his expected utility is greater than zero. The model brings out the fact that higher is the risk perceived by the consumer in a particular purchase, the lower will be the perceived benefits associated with it and hence lower will the utility expected from the purchase.Perceived risks and benefits in online shopping is one of the most rigorously studied topics by researchers; however, few of them have worked on components of risks and benefits particularly in Indian context. Moreover, very few of them have included perceived risk and perceived benefit in a single study. This paper therefore, attempts to investigate dimensions of risks and benefits that have a significant impact on Indian consumer's attitude towards online shopping.LITERATURE REVIEWOnline medium provides consumers with various shopping benefits like convenience (Swaminathan et al. 1999) cost saving (Reibstein, 2002) and huge variety (Keeney, 1999) Despite of various functional benefits, online shopping has some clear disadvantages like consumers cannot touch or feel the product or delay in delivery and possession. Therefore, this is obvious that consumers perceive higher risk in shopping in such non store formats (Suki, 2007) Rich (1964) defined perceived risk in shopping as the uncertainty perceived by the consumer in completing a particular purchase decision. The uncertainty regarding any purchase decision and consequence of a poor purchase fosters risk in the mind of consumers (Bauer, 1960) Researchers have claimed perceived risk to be an important factor in online shopping adoption (Clemes et al. 2013; Liebermann and Stashevsky, 2002; Suki, 2007) It has also been claimed that perceived risk has a significant negative relationship with attitude and intention to shop online (Zhao, 2012) Consumers who perceive higher risk in online shopping are less likely to make a purchase online.Perceived risk in online shoppingA consumer is apprehensive about various issues in a virtual/online market. This section deals with nature and type of these perceived risks.Financial RiskFinancial risk in online context is defined as net loss of money to a customer due to the possibility of misuse of credit card information (Oberndorf, 1996; Sweeney et al. 1999) Security considerations regarding transactions over internet are very common among online consumers and media news fosters it. Many consumers believe that it is very easy to get a credit card stolen over the internet (Caswell, 2000) and hence is one of the major apprehensions that affect online shopping (Maignan and Lukas, 1997; Forsythe Shi, 2003) Forsythe Shi (2003) perceived financial risk not only make online shoppers more selective regarding the websites they patronize but also prevent heavy shoppers from spending as much online as they might otherwise spend if they were not concerned with financial risk.