E-COMMERCE: Consumer Behavior while Shopping Online & Barriers to E-Commerce in Pakistan.

ABSTRACT: The research focuses on the consumer behavior while internet shopping. The research explores the main reason as to why people shop online in Pakistan and what the products they mostly shop for are. The main reasons what consumers think are the barriers to development of e commerce in Pakistan are. And people from which income group mostly shop online. All of these questions are answered through this research. This research will mainly help the online marketers and vendors in better understanding the consumer behavior. RESEARCH TOPIC: Consumer Behavior while shopping online and the barriers to E commerce in Pakistan. HYPOTHESIS: 1. Internet shopping doesnt depend on income level.
2. Internet shopping doesnt depend on age. 3. People do internet shopping not just for the sake of convenience. 4. Main factor restricting the development of E commerce in Pakistan is not illiteracy.

DEPENDENT VARIABLE: Internet Shopping INDEPENDENT VARIABLES: 1. Income. 2. Age 3. Convenience. 4. Prices of product. 5. Product information. 6. Security of websites.

BACKGROUND OF RESEARCH: Almost two decades ago e commerce throughout the world was not considered an essential in running a business but today in developed countries of the world, businesses are considered to be incomplete if some part of them is not done virtually. E commerce in Pakistan is considered to be in its infant stage and not well developed enough. And due to this many businesses in Pakistan remain behind their counter parts in other Asian countries like India and Malaysia. This becomes a barrier towards slow growth and low profit of their business because by just maintaining the business in real world and not in virtual world, they allow geographical barriers to hinder in the growth of their businesses. The reasons of slow RESEARCH OBJECTIVES: With keeping in view the problem of low growth faced by e commerce in Pakistan, the objectives of the paper are To find out the main barrier to the growth of e commerce in Pakistan (Problem Statement) To find out whether income and age plays a significant role while people shop online To find out the main reason, why people do internet shopping? growth of e commerce in Pakistan may be many, through this research we are attempting to find out the main reason behind this restricted growth of e commerce in Pakistan. Because, until and unless the reason behind it is unknown, the solution cannot be provided. Secondly, since ecommerce in Pakistan is not well developed enough, the behavior of internet shoppers is still unknown which is also a hazard for the firms wanting to start e business. Through this research we attempt to find out the consumer behavior while doing internet shopping. Because e commerce cannot be taken to a next level until the buyer behavior is unknown.

RESEARCH METHODOLOGY: In order to achieve our research objectives, our targeted population is the general public in the city of Karachi. We selected a sample size of 100 people which included people of all ages belonging to different profession and having different income level. We use

Convenience sampling, a mix of old, middle and young age customers were selected to form a sample. SPSS software is extensively used for analyzing and interpreting the data.

Force behind e-commerce and an important role in consumer purchasing decisions.

SURVEY RESULTS We did a survey which consisted of a sample size of 100. The results that we found out through the survey are following. HYPOTHESIS 1 Ho: Age is not a major factor in deciding whether people shop online or not. H1: Age is a major factor in deciding whether people shop online or not.

ANOVAb Model 1 Regression Residual Total Sum of Squares .985 17.765 18.750 df 1 98 99 Mean Square .985 .181 F 5.432 Sig. .022a

a. Predictors: (Constant), AGE b. Dependent Variable: Internet shopping

3

P-value is .022 (2.2%) which is lesser than the significance level of 5 % therefore we are 95% confident that 98.5 % of the movement in consumer behavior towards internet shopping is explained by age factor. Therefore we reject the Ho i.e. Age is not a major factor in deciding whether people shop online or not. AGE * Internet shopping Cross tabulation Count Internet shopping YES AGE 18-25 26-35 36-45 46-55 56 or above Total 9 27 31 1 7 75 NO 5 4 4 4 8 25 HYPOTHESIS 2 Ho: Internet shopping doesnt depend on income level H1: internet shopping depends on income level. Total 14 31 35 5 15 100

INCOME * Internet shopping Crosstabulation Count Internet shopping YES INCOM below 20000 E 20001-35000 35001-50000 50001-65000 65001 and above Total 6 12 19 19 19 75 Sum of Squares Regression Residual Total .798 17.952 18.750 NO 11 2 2 2 8 25 ANOVAb Model 1 df 1 98 99 Mean Square .798 .183 F 4.356 Sig. .039a Total 17 14 21 21 27 100

a. Predictors: (Constant), INCOME b. Dependent Variable: Internet shopping P-value is .039(3.9%) which is lesser than the significance level of 5 % therefore we are 95% confident that 79.8 % of the movement in consumer behavior towards internet shopping is explained by income factor. Therefore we reject Ho i.e. Internet shopping doesnt depend on income level. Similar result is shown by cross tabs and the graphical presentation .So we can conclude that age and income are important factors which influence the decision of shopping online. The people with lower income dont shop online often because of their low income as mostly the products available online are original brands are very expensive hence out of affordable range for low income groups. Another reason may be that shopping on internet requires one to have a credit card and most of the people belonging to low income groups dont maintain a bank account or even if they do they dont apply for credit cards.

HYPOTHESIS 3 Ho: People dont shop online for the sake of convenience H1: People shop online for the sake of convenience

Do internet shopping because * Internet shopping Crosstabulation Internet shopping YES Do internet shopping because N/A Convenience Easy comparison of products Lower Prices Total ANOVAb Model 1 Regression Residual Total Sum of Squares .978 17.772 18.750 df 1 98 99 Mean Square .978 .181 F 5.393 Sig. .022a 0 36 18 21 75 NO 25 0 0 0 25 Total 25 36 18 21 100

a. Predictors: (Constant), Do internet shopping because b. Dependent Variable: Internet shopping P-value is .022 (2.2%) which is lesser than the significance level of 5 % therefore we are 95% confident that 97.8 % of the movement in consumer behavior towards internet shopping is explained by convenience factor. Therefore, we reject Ho i.e. People dont shop online for the sake of convenienc

Similar result is proved by the above graph, more than 60 people from our sample shop online because is it convenience i.e. it

surpasses all geographical barriers, saves times, purchases can be made at any time be it day or night.

HYPOTHESIS 4 Ho: The main barrier restricting the development of e commerce In Pakistan is not illiteracy. H1: The main barrier restricting the development of e commerce in Pakistan is illiteracy.

ANOVAb Model 1 Regression Residual Total Sum of Squares .986 22.804 23.790 df 1 98 99 Mean Square .986 .233 F 4.237 Sig. .042a

a. Predictors: (Constant), Q9 (A) b. Dependent Variable: E comm in Pakistan is well developed?

P-value is .042(4.2%) which is lesser than the significance level of 5 % therefore we are 95% confident majority of the consumer believe that illiteracy is the major barrier in development of ecommerce in Pakistan. Therefore we reject Ho.

Correlations E comm in Pakistan is well developed? E comm in Pakistan is well Pearson Correlation developed? Sig. (2-tailed) N Q9 (A) Pearson Correlation Sig. (2-tailed) N *. Correlation is significant at the 0.05 level (2-tailed). 1 100 .204
*

Q9 (A)

.204* .042 100 1 100

.042 100

Same is proved by the graph above, almost half the chunk of the pie chart shows that slow development of e commerce is attributed to illiteracy and then traditionalist nature of Pakistani society and Security and privacy issues are more responsible of backwardness of e commerce in Pakistan. OTHER FINDINGS

Internet shopping * Information you look for Cross tabulation Count Information you look for N/A Detailed Information about the product 0 25 25 44 0 44

Price Comparison 31 0 31

Total 75 25 100

Internet shopping Total

YES NO

The above results through analysis show that most of the people while shopping online look for detailed information about the product. Whereas none of them look for information about the vendor.

How many times you actually buy a product? Frequenc y Percent Valid NA Always 3/4 times half the times never Total 26 29 14 30 1 100 26.0 29.0 14.0 30.0 1.0 100.0 Valid Percent 26.0 29.0 14.0 30.0 1.0 100.0 Cumulative Percent 26.0 55.0 69.0 99.0 100.0

Above table shows that most of the people (30%) while shopping online, look for information about the product deliberately and when they do so they buy the product actually only half the times. And 29% of the people always buy the product when they search for the information related to the product. Shop from certified websites? Frequenc y Percent Valid N/A Yes Sometimes Total 25 59 16 100 25.0 59.0 16.0 100.0 Valid Percent 25.0 59.0 16.0 100.0 Cumulative Percent 25.0 84.0 100.0

Our another important finding is that most of the people while shopping online shop from websites that are certified and recognized. So that means for 59%

10

of the people from our sample are really concerned about security and privacy issues related to shopping online.

Now, about the most important result from our survey that will help the online marketers and the vendors in making the decision of starting an e business. That is what people really shop for online. The results show that almost 40% of the people in Pakistan shop for software and 14% of the people shop from clothes and dresses. Frequenc y Percent Valid N/A Households Beauty products Clothes and dresses Branded products soft wares Total 25 4 5 14 12 40 100 25.0 4.0 5.0 14.0 12.0 40.0 100.0 Valid Percent 25.0 4.0 5.0 14.0 12.0 40.0 100.0

Cumulative Percent 25.0 29.0 34.0 48.0 60.0 100.0

11

The results show that most of the people when they visit a website for purchasing a product, come to know about that website from a friend. And even if they come across online ads, they dont visit those websites. The reason may be they dont trust the advertisements and since e commerce in Pakistan is not well developed, stated in literature survey and proved by the findings .

of the research; people may be concerned about the security issues of the websites they visit for the first times. Whereas when the websites are recommended by their friends and peers they feel satisfied and secure to shop from them because their friends are the satisfied shoppers of that website and their opinion and advice can be trusted completely

12

AN IMPOTANT QUESTION: CAN E COMMERCE IN PAKISTAN BE CONSIDERED WELL DEVELOPED?

Frequenc y Percent Valid No Somewh at Total 61 39 100 61.0 39.0 100.0

Valid Percent 61.0 39.0 100.0

Cumulative Percent 61.0 100.0

The research also shows a very important result that 61% of the people dont think that e commerce in Pakistan is well developed, which is also stated in the literature review and is proved through previous researches

CONCLUSION: From the research we can conclude that age and income are important factors which influence the decision of shopping online. The people with lower income dont shop online often because of their low income as mostly the products available online are original brands and people belonging to low income groups prefer to shop from black markets where copies of branded products are available easily at very low prices. Then people belonging to age group of 25-45 are the people who mostly shop online, and we can consider that this is so because people belonging to higher age group dont have much knowledge about technology and believe in shopping the traditional way. The answer of why people shop online is also answered in this research; people do so because of convenience as shopping online surpasses all the geographical, you can sit in
13

Asia and shop from European markets at any time. You can sit in your living room and choose from a wide range of products, so the main reason of people logging on to the internet for shopping is convenience. Another main cultural aspect of Pakistani society is that they rely more on the advice given by their friends and family rather than believing an advertisement no matter how attractive it is. Thats why when people go online shopping they mostly visit those sites that are advised by their friends trusting their opinion that the website is safe. Pakistanis while shopping online mostly shop for software, that may be because e markets in Pakistan is not so well developed that they offer a wide range of products, and the delivery channels that the sites may use may not be 100% efficient, whereas the software is directly downloadable there and then, as soon as you pay for the product the product is yours. The survey also shows that ecommerce is not very much developed in Pakistan. Why? because of illiteracy. And even if people are literate they are not educated enough to know and understand what e commerce really is. For example, an 18 year old working in a workshop who has passed his 10th grade exam. Although he is literate but he is not educated or learned enough to understand what e commerce is. Then another reason for slow development of e commerce is traditionalist nature of Pakistani society, many people in Pakistan have their family business and have a very loyal set of clients, they earn so much profit from carrying on the business just like that they dont find the need to go internet. The people in Pakistan when go shopping,

mostly shop from a set of particular shops because they have been shopping from their since a long time and have developed the relationship with the shopkeepers over a long period of time, they trust them that the product they are getting will be worth their money and the shopkeeper will not deceive them. Also most of the people feel more comfortable while dealing with shopkeeper face to face. So the solution to these problems cannot be provided readily. It takes a long period of time to increase the literacy rate of the country and traditions only change when people are more educated and open enough to think that it is perfectly ok if they dont follow the same line of traditions and trying a new thing is good for them. But making internet more safe and educating people about e commerce will surely make the businesses turn their ships towards e business. Bibliography Abigail, L. (2009). Numerous Advantages of Online Shopping. USA. Briody. (1999). Customer service Quality in e-business. London. Chen, S. &. (2000). Interactivity as the driving force behind ECommerce . Memphis, USA. Chow. (2000). Integration of Quality Pre & Post Sale. China. Connellan, Z. &. (2001). Challenges to E-Business. Chicago.

14

Gutirrez, Z. Z. (2001). Customer Service Factors Influencing Internet Shopping in New Zealand. New Zealand. Jackson, D. (2008). Benefits on online shopping. Australia. Kundi, G. M. (2007). E business in Pakistan - Opportunities and Threats. NWFP (Pakistan). Nielsen, J. (1999). Why do people shop online. Chicago. Pho, W. a. (2009). Drivers of customer intention sto use online banking. Taiwan. Sajid, D. M. (2003, 10 5). E commerce and its Business in Pakistan. Pakistan. Tunyo, T. H. (2008, March 18th). Business Recorder , p. 4. Vaggelis Saprikis, A. C. (Vol. 2010 (2010), Article ID 854516). Perceptions towards Online Shopping: Analyzing the Greek University Students Attitude. IBIMA Publishing,Communications of IBIMA , 13. Warkentin, J. a. (2003). The online consumer trust construct. Mississippi State, USA.

15