CHAPTER 1

INTRODUCTION

1|Page
1.1 Background of the study

Consumer preference is defined as the subjective tastes of individual

consumers, measured by their satisfaction with those items after they
have purchased them. This satisfaction is often referred to as utility.

A set of assumptions that focuses on consumer choices that result in

different alternatives such as happiness, satisfaction, or utility.

Consumer makes decisions by allocating their scarce income across all

possible goods to obtain the greatest satisfaction. Formally, we say that
consumers maximize their utility subject to budget constraint. Utility is
defined as the satisfaction that a consumer derives from the consumption
of a good. As noted above, utility’s determinants are decided by a host of
non economic factors. Consumer value is measured in terms of the
relative utilities between goods.

The entire process of consumer preference results in an optimal choice.

Consumer preference allows a consumer to rank different bundles of
goods according to the satisfaction levels or utility. Utility is nothing but
the total satisfaction of consuming a good or service.

2|Page
Consumer preferences are defined as the subjective (individual) tastes, as
measured by utility, of various bundles of goods. They permit the
consumer to rank these bundles of goods according to the levels of utility
they give the consumer. Note that preferences are independent of income
and prices. Ability to purchase goods does not determine a consumer’s
likes or dislikes.

For example, Kyle can have a consumer preference for Rolex watches over
Fastrack but he only has the financial income to purchase a Fastrack watch.

Let us further inspect the idea of consumer preferences through the three
basic assumptions:

1. Completeness which is when the consumer does not have

indifference between two goods.

3|Page
If faced with apples vs oranges, every consumer does prefer one good
over the other.
For example, Amy has two alternative choices between steak or chicken.
The assumption of completeness reflects the idea that Amy should be
able to compare the options given to her. In other words, she should be
able to identify whether she likes or dislikes one of them.

Transitivity, to have transitive preferences, a person, group, or society

that prefers choice option x to y and y to z must prefer x to z. A
preference ordering is transitive if, for any three outcomes A, B, and C, a
preference for A over B and a preference for B over C implies a preference
for A over C. … For example, a transitive preference would be preferring
apples to bananas, bananas to cranberries, and apples to cranberries.

Non-Satiation which technically is a famous economic assumption that

“more is always better.” That is, you never turn down from having more.
The property of local non-satiation of consumer preferences states that
for any bundle of goods there is always another bundle of goods
arbitrarily close that is preferred to it. Formally, if X is the consumption

4|Page
set, then for any and every, there exists such that and is preferred to.
Satiation in buyer hypothesis in financial aspects is the purpose of most
extreme fulfillment or bliss point that can be accomplished by a
consumer. It does not consider a consumer’s buying power, yet rather
just his/her utility capacity.

1.2 Literature Review

The online consumer market place is growing at an exponential rate. At
the same time, technology has enhanced the capacity of online
companies to collect, store, maintains, transfer and analyze vast amount
of data from and about the consumer who visit their web sites. This
increase in the collection of and use of data has raised public awareness
and consumer concern about online privacy. Number of studies has been
done in this field some of which are discussed below:
Subba Rao, Truong, Senecal and Le, (2007) conducted the study on- How
Buyers Expected Benefits, Perceived Risks, and E-Business Readiness
Influence their Marketplace usage and claims that buyer’s E-Business
readiness moderated the relationship between expected benefits and
usage of electronic marketplace.
Prasad and Aryasri (2009) have explored the determinants of shopping
behavior such as convenience, customer service, trust, web store
environment and web shopping enjoyment and examine the effect of
these factors towards online buying behavior.
Dr. Durmaz(2011) in the study entitled- impact of cultural factors on
online shopping behavior and the study found that while buying goods
and services, culture, beliefs and traditions take an important position,
5|Page
while the environment, friends and social groups stated 48.6%. In this
case the impact of cultural factor means a lot.
Wells et al. (2011) in his study entitled- online impulse buying:
understanding the interplay between consumer impulsiveness and
website quality focused on the direct relationships between the website
and online impulse buying. The study found and proposed the model
considered the direct influence of website quality on the urge to buy
impulsively.
Dahiya Richa(2012) in the study entitled- Impact of demographic factors
of consumers on online shopping behavior: a study of consumers in India
and the study found that online shopping is a recent phenomenon in the
field of E- Business and is definitely going to be the future of shopping in
the world. Most of the companies are running their online portals to sell
their products/services online.

1.3 Objectives of the Study

 To understand the consumer’s preference of online shopping for
Flipkart & Amazon.
 To know how consumers preference shape towards online stores.
 To find out the key concerns of consumers while online shopping.

1.4 Research Methodology DATA

COLLECTION METHOD

6|Page
Primary Data
It is the original primary data, for specific purpose of research project. For
this project, I have to use the common research instrument or tool-
Questionnaire.
Secondary Data
It will be collected to add the value to the primary data. This may be used
to collect and records by different websites, magazines, annual reports,
journals, reference books and newspapers, etc.

SAMPLE DESIGN
Sample Unit
For studying consumer preference towards on online shopping platforms,
samples were randomly selected from Kolkata.
Sample Media
Questionnaire in the form of Google forms. Sampling methods:

 Random sampling
 Convenient sampling
Research place- The place of study is Kolkata, West Bengal, India

1.5 Limitations of the Study

 Sample Size: A larger sample size would have ensured a significant
representative distribution of people.

7|Page
 Lack of prior research studies on the topic: Depending on the scope
of my research topic there was a little prior research on the same.
 Longitudinal Effect: The time available to investigate was
constrained by due date of the assignment.
 Cultural Bias: Culturally biased research can have significant real-
world effects. One way to deal with cultural bias is to recognize it
when it occurs which I have certainly kept in mind.

8|Page
 CHAPTER 2
CONCEPTUAL FRAMEWORK

9|Page
 2.1 E-Commerce
E-Commerce (electronic commerce) is the activity of electronically
buying or selling of products on online services or over the Internet.
E-Commerce draws on technologies such as mobile commerce,
electronic funds transfer, supply chain management, Internet
marketing, online transaction processing, electronic data Interchange
(EDI), inventory management systems and automated data collection
systems. E-Commerce is in turn driven by the technological advances
of the semiconductor industry, and is the largest sector of the
electronics industry.
Contemporary electronic commerce can be classified into two
categories. The first category is business based on types of goods sold
(involves everything from ordering “digital” content for immediate
online consumption, to ordering conventional goods and services, to
“meta” services to facilitate other types of electronic commerce). The
second category is based on the nature of the participant (B2B, B2C
and C2C).
On the institutional level, big corporations and financial institutions
use internet to exchange financial data to facilitate domestic and
international business. Data integrity and security are pressing issues
for electronic commerce.
Aside from traditional e-commerce, the terms, m-commerce (mobile
commerce) as well (around 2013) t-commerce have also been used.

Objectives of E-Commerce:-

10 | P a g e
  Reduce management costs.
 Developing business relations.
 Providing a unique customer experience.
 Increasing the number of loyal customers.
 Boosting the efficiency of services.
 Developing relevant target.
 Making responsive ecommerce website.
 Increasing sales.

Features of E-Commerce:-

 Ubiquitous in Nature: The customer limit of a real business is

limited to the city where it is located, whereas the reach of an E-
Commerce business is global. E-Commerce encourages customers
to buy things from any corner of the world.
Because of the ubiquitous nature of the E-Commerce business, the
working hours and geographical boundaries of catering increase.

11 | P a g e
 People can connect to an E-Commerce business in the availability
of the Internet.

 Large customer reach: E-Commerce business has reached to the

customers living all around the world. Internet reaches national
boundaries. E-Commerce provides an opportunity to businessmen
to cater to the customers seamlessly without being limited by
cultural and national boundaries.
E-Commerce marketplace has the potential to reach millions of
worldwide customers.

 Universal standard: One of the most essential features of an E-

Commerce business is the universal acceptability of the website.
An E-Commerce website must work upon the universally accepted
systems and methods. Maintaining global standards helps the
users of an E-Commerce website to use the website efficiently.

 Interactive platform: Another important feature of an E-

Commerce business is its interactivity. Interactivity means the two-
12 | P a g e
 way communication between the users of the E-Commerce
website and businesses. Customers feel easy to purchase from the
websites where they can interact before, after, and even during
the purchase.

For example, when a student wants to buy an online course, he

would need the assistance of the expert of the website to help hi
choose a suitable level of course for him.

In addition to this, businesses can know about the problem faced

by the users of their E-Commerce platform and can fix them in
order to reduce the losses.

Advantages of E-Commerce:-
 Faster Buying Process: E-Commerce has speed up the whole buying
process for customers. They do not need to visit physical outlets for
shopping and can purchase products by just sitting at their home. It
saves huge times and performs faster transactions.
 Eliminates Operating Cost: It has reduced the overall operating cost
of businesses. E-Commerce has eliminated the need of opening
physical outlets by the business. For operating an outlet, there are
huge expenses in terms of rent, utilities, various bills, and staff
salaries. It saves all these expenses and operates all business
activities through an online website.
 Personalize Shopping Experience: E-Commerce enables customers
in enjoying personalized shopping experience. Customers can
13 | P a g e
 search for a large variety of products as per their choice and needs
without any restrictions. Online business shows products to
customers according to their interest and their location.
 Available 24*7: Online shopping facility is available at all the time
that is 24 hours a day and 7 days a week. This is one of the major
advantages of E-Commerce that customers can access online
products at any time. Unlike physical outlets, there is no official
opening and closing time here.

Disadvantages of E-Commerce:-
 Lack of Personal Touch: Customers lack the facility of touching and
feeling products in case of online shopping. They are sometimes
more satisfied by purchasing at physical outlets by properly
checking the product before buying.
 No Guarantee about Product Quality: Customers cannot get
ensured regarding the quality of products available online. They
may be cheated by companies and receive faulty products.
 Security Issues: Customers may lose their essential credentials while
shopping online. There are various hackers over the internet which
may steal customer’s data and may cause great loss to them.
 Long Delivery Period: Another major disadvantage of online
shopping is that customers need to wait for longer time periods for
getting their products delivered. In case of offline shopping,
customers get on-spot delivery of their products.

14 | P a g e
 2.2 Company Profile
FLIPKART

Flipkart is an electronic commerce company headquartered in Bangalore,

Karnataka. Flipkart was founded in 2007 by Sachin Bansal and Binny
Bansal, both alumini of the Indian Institute of Technology, Delhi. They
worked for Amazon.com, and left to create their new company
incorporated in October 2007 as Flipkart Online Services Pvt. Ltd. The first
product they sold was the book “Leaving Microsoft to Change the World”
to a customer from Hyderabad. Flipkart now employs more than 33,000
people.
After the failure of its 2014 Big Billion Sale, Flipkart carried out a second
Big Billion Sale where it is reported that they saw a business turnover of
Rs. 24,516.00 in gross merchandise volume. Flipkart.com ranks #502 in
world according to Alexa traffic rankings. In Google page it ranks #6. It
receives 2.2 million page views in a day and generates $6,574 in
advertising revenue every day. Moreover, it has certain losses 0.60% in
traffic ranking. Loading time of an average page is 2.1 seconds as it is
much faster than 29% of sites around the world. The mode of payments

15 | P a g e
includes Credit Card, Debit Card, Net-Banking, e-gift vouchers, cash on
delivery.
SWOT Analysis of Flipkart

AMAZON

16 | P a g e
Amazon was founded by Jeff Bezos from his garage in Bellevue,
Washington, on July 5, 1994. Initially an online marketplace for books, it
has expanded into a multitude of product categories: a strategy that has
earned it the moniker The Everything Store. It has
multiple subsidiaries including Amazon Web Services (cloud
computing), Zoox (autonomous vehicles), Kuiper Systems (satellite
Internet), Amazon Lab126 (computer hardware R&D). Its other
subsidiaries include Ring, Twitch, IMDb, and Whole Foods Market. Its
acquisition of Whole Foods in August 2017 for Rs. 10,90,18,48,20,000
substantially increased its footprint as a physical retailer.
Amazon has earned a reputation as a disruptor of well-established
industries through technological innovation and mass scale. As of 2021, it
is the world's largest online retailer and marketplace, smart
speaker provider, cloud computing service through AWS, live-
streaming service through Twitch, and Internet company as measured
by revenue and market share. In 2021, it surpassed Walmart as the
world's largest retailer outside of China, driven in large part by its paid
subscription plan, Amazon Prime, which has over Rs.16,34,46,00,000
subscribers worldwide. It is the second-largest private employer in the
United States. Amazon also distributes a variety of downloadable and
streaming content through its Amazon Prime Video, Amazon Music,
Twitch,
and Audible units. It publishes books through its publishing arm, Amazon
Publishing, film and television content through Amazon Studios, and has
been the owner of film and television studio Metro-Goldwyn-Mayer since
March 2022. It also produces consumer electronics—most
notably, Kindle e-readers, Echo devices, Fire tablets, and Fire TVs.
Amazon has been criticized for customer data collection practices, a toxic
work culture, tax avoidance, and anti-competitive behavior.

17 | P a g e
2.3 National Scenario

India in the recent years has been experiencing an exponential growth in

e-commerce and there are new companies springing up at a rapid rate. E-
commerce had a standout year in 2015, when it grew in size from Rs.
4,08,61,50,00,000 to Rs. 6,53,78.40,00,000 and pervaded every aspect
of our lives. In 2016, it grew further. The industry is set to become more
‘m’, or mobile, than ‘e’ commerce. M-commerce has been and will be
the inevitable trend of modern times. That means more users. No doubt,
more users will help companies build scale, but they will embrace a few
changes themselves.

Companies will go after profitable growth rather than wooing customers

with deep discounts (in other words, running or losses). A bigger user
base will just be the cue for companies to reduce discounts and focus on
profitable growth.

18 | P a g e
“Building scale won’t be a challenge for the large players,” says Sandeep
Aggarwal, founder, Shopclues. Six of the largest e-commerce players-
Flipkart, Amazon India, Snapdeal, eBay.in and Shopclues- together have
about 85-90’s of the e-commerce business in India.

Cash on Delivery (CoD), a preferred mode of payment for many

customers, will decline as more and more people familiarize themselves
with using payment wallets to shop and pay bills.

Companies will have their hands full as more users come on board, but
they will be up to the task of serving the needs of customers. That will
lead to the emergence of new categories of services like delivering even
milk and water- which Paytm founder Vijay Shekhar Sharma believes “will
replace the neighborhood store. You won’t need to step out to shop”.

Brick-and-mortar will not disappear, but “there’ll be more fusion

between online and offline

Services,” he adds. Here is a tantalizing possibility of how this and then

walk down to the store

To pick up the product selected.

“Self-logistics will be an option,” says Sharma. Shopclues Aggarwal says

the ecosystem is healthier and is maturing. “There will be higher
adoption of m-commerce and mobile wallets.” E-commerce will make
inroads into rural areas. Traditional business houses such as Reliance
Industries and Tata Group will enter the business more aggressively. One
key challenge will be logistics as there is no large-scale player that covers
the whole country cost effectively.

19 | P a g e
GOVERNMENT LAWS & REGULATIONS ON ONLINE RETAIL
In a boost retailers and grocery start-ups such as Bigbasket and Grofers,
the government on Monday allowed 100% FDI in food retail, including
through e-commerce, provided such items are produced. Processed or
manufactured in the country.

This will allow multi-brand retail giants such as Walmart to look at their
food business here

Closely and perhaps even foray into B2C food retail. Currently, the US
giant operates a B2B business here since FDI in multi-brand retail is not
allowed. The US retailer has built a strong backend infrastructure in food.
Similarly, the move will help Indian hyper-local grocery start ups raise
funds more easily.

"The decision by the government to allow up to 100% foreign direct

investment (FDI) through FIPB in marketing of food products produced or
manufactured in India, including through e commerce, is very progressive
and will help in reducing wastage, helping farm diversification and
encourage industry to produce locally within the country. This far-
reaching reform will benefit farmers, give impetus to food processing
industry and create vast employment opportunities. We will study the
policy document when government finalizes and issues it," said a Walmart
India spokesperson.
The decision comes without any riders, department of industrial policy
and promotion secretary Ramesh Abhishek said. The food processing
ministry wanted the food retailers to mandatorily invest in back-end

20 | P a g e
infrastructure besides being allowed to sell some non-food goods DIPP
said that the e-commerce marketplace may provide support services to
sellers in warehousing and logistics.

However, such entities will not exercise ownership over the inventory.
“Such an ownership over the inventory will render the business into
inventory-based model,” it said in a press note.

As per the norms, an e-commerce firm will not be permitted to sell more
than 25 per cent of total sales from one vendor or its group companies.
“E-commerce entities providing marketplace will not directly or indirectly
influence the sale price of goods or services and shall maintain level
playing field,” it added.

This may require some of the existing players to alter their structures.
“The cap of 25% on sales by a vendor on marketplace will ensure a broad
basing of vendors for a true marketplace. This may require some of the
operators to go back to the drawing board to ensure compliance,” Mr.
Gupta added.
2.4 International Scenario
Consumers worldwide spent nearly Rs.28,27,61,58,00,000 online in
2019, up from Rs.23,94,48,39,00,000 in 2018, according to the
forecast from Internet Retailer, a Digital Commerce 360 brand. The
expected 17.9% year-over-year growth in global web sales would
be a slowdown from the 20.7% jump last year. However, global
web sales are still growing faster than the more saturated U.S.
commerce market, which Internet Retailer projects increased to
14.0% in 2019
Global retail sales through all channels are likely to hit
Rs.171,71,61,83,00,000 by the end of the year, at 3.4% uptick from
21 | P a g e
 Rs.1,65,97,94,13,00,000 in 2018, according to Internet Retailer
estimates. This would increase online’s share of total retail sales to
16.4%, and ecommerce would account for more than
three-quarters of overall retail gains.

As online revenue continues to grow each year, larger gains are necessary
to achieve the same level of growth, so some deceleration makes sense.
Ecommerce penetration has steadily been on the rise- with online’s share
of retail spend registering 10.5% in 2016, rising to 12.3% in 2017 and
closing out 2018 at 14.4%, Internet Retailer estimates. The momentum
continued into 2019, with penetration north of 16.0%, according to
Internet Retailer’s analysis.

The largest online retailers are powering this growth. In 2018, three of
the top 10 global online retailers ranked by 2018 commerce sales
(excluding sites operating exclusively as marketplace platforms) were
web-only merchants. Their online revenue also significantly contributed
to bumping up 2018’s commerce penetration. As web sales rise without
an accompanying uptick in offline sales, online’s share of total retail sales
grows.
As a whole, the top 10 hit Rs. 34,91,68,94,32,00,000 in ecommerce
sales in 2018, up 22.5% from Rs. 28,51,25,76,29,00,000 in 2017. These
retailers accounted for 14.6% of all global ecommerce sales in 2018.

22 | P a g e
 CHAPTER 3

PRESENTATION OF DATA ANALYSIS AND

FINDINGS

23 | P a g e
3.1 Data Analysis
The objective of the research was studied with respect to a regular
online shopper who shopped more than once because they would be
the right respondent to give an insight about the online shopping.
Therefore it is firstly important to understand who is a regular online
shopper.

 What is your most preferred mode of payment while you

purchase from online?

Interpretation: As per the survey, the most preferred mode of

payment is Cash on Delivery (CoD). Other preferences like Debit/Credit
card payment & Net Banking is slowly gaining momentum.

Source: This diagram & Information is Secondary Data.

24 | P a g e
 Are you a frequent online shopper?

Interpretation: As per the data collected, 75% of the people are

regular online customers, these are mainly working people who do
not have time to go to shop and purchase and also the younger
generation is depended on online purchase as they seek variety of
alternatives for the same product. 25% of the people are not regular
online customers because the quality of the products cannot be
known and some people are not flexible to shop online.

Source: This diagram & Information is Secondary Data.

25 | P a g e
 What is your most preferred online site?

Interpretation: As per the data collected, vast majority of respondents

prefer Amazon to do their online shopping.

Source: This diagram & Information is Secondary Data

 Which online store has a better & effective mobile app layout
for your ease of shopping?

26 | P a g e
 Interpretation: As per the survey, 66.7% of the respondents prefer
Flipkart mobile app over Amazon’s because it eases the shopping
experience of the customers.

Source: This diagram & Information is Secondary Data.

 Which online store has a better product display & description?

27 | P a g e
 Interpretation: As per survey, both Flipkart & Amazon have good
product visibility & detailed description (like price, discount & offers,
pictures, feel, specifications, dimensions, contents of package, etc.) but,
Amazon has a slight edge over Flipkart.

Source: This diagram & Information is Secondary Data.

 Which online store has a variety of product choices in-terms of

sorting & filtering as per individual requirements & seller
ratings?

28 | P a g e
Interpretations: As per the data collected, Amazon stands out to be
the provider of a variety of product choices which allows shoppers to
sort & filter out products according their requirements (like gender,
age, price, availability, size, features, color, etc.) & seller ratings given
by other customers.

Source: This diagram & Information is Secondary Data.

 Which online store gives you a better customer feedback, rating &
reviewing system?

29 | P a g e
Interpretation: As per the survey, 61.5% respondents indicate that
Amazon has better customer feedback, rating & reviewing system
over Flipkart.
Source: This diagram & Information is Secondary Data.

 Which online store has a better ‘After sales-service’?

30 | P a g e
Interpretation: As per the survey, 66.7% of the respondents express
that Amazon has a better ‘After sales-service’ over Flipkart.

Source: This diagram & Information is Secondary Data.

 Which online store has a swift delivery system?

Interpretation: As per the survey, vast majority of respondents

prefer Amazon’s swift product delivery system over Flipkart

Source: This diagram & Information is Secondary Data.

31 | P a g e
3.2 Findings
As per the survey data, findings are as follows:
 Majority of the online shoppers are students are between 10 to 30
years of age who are powerful internet users in the country.
 People prefer to shop with Mobile applications rather than
logging into the official website solely due to the shopping
experience.
 The most preferred mode of payment while purchasing online is
Cash on Delivery followed by Net banking, Debit/Credit Card and
then EMI.
 Amazon is more preferred by the people over Flipkart for online
shopping due to various factors.
 People prefer to shop with Flipkart over Amazon because of the
ease of shopping experiences through its official website & mobile
applications.

32 | P a g e
 CHAPTER 4
CONCLUSION & RECOMMENDATIONS

33 | P a g e
4.1 Conclusion
This research shows that online shopping is having very bright
future in India. With the use of internet, consumers can shop
anywhere, anything and anytime with easy and safe payment
options. Consumers can do comparison shopping between
products, as well as, online stores. Online shopping even after
gaining popularity won’t completely eliminate traditional
shopping. There are still areas where we prefer to go into a shop
and select items. The advent of plastic money and the
tremendous usage of debit and credit cards have brought shops
from around the world to the tip of customer’s finger or to the
website. But there’s no going back, and online shopping will
become an even more crucial part of our lives, growing more
sophisticated with each passing year. Over all the factors from the
internet that influenced or prevented online consumer behavior
and attitude need to be carefully concerned by the online
retailers, who can utilize the appropriate marketing
communications to support the customers purchase decision
making process and improve their performance.

34 | P a g e
4.2 Recommendations
 Amazon needs to improve its mobile application for
improving the shopping experience of their customers & to
attract more customers.
 EMI facility can be implemented at the time of ‘sale’ to
increase the tendency of shopping.

 Flipkart has a wide range of products but it should work on

improving its after-sales service by tweaking some of its
customer relations policies & by better training of their
customer agents.

35 | P a g e
 CHAPTER 5
BIBLIOGRAPHY

36 | P a g e
 www.flipkart.com/slideshare
 www.amazon.in/slideshare
 www.wikipedia.com
 Other books and journals

37 | P a g e
+

38 | P a g e