Ecommerce And Online Ticket Booking

Published Date: 02 Nov 2017

In recent years with revolutionized technological development in Internet Industry, the penetration has grown to approx. 10% of total population of India, which is further expected to rise to 30% by end of 2015, which amounts to 500 million unique internet users. Leveraging growing internet power, online businesses have switched to strategies which is attracting and promoting more consumers to do the business online. Furthermore, with secured online payments and grievance mechanism, trend has been observed that there is an increase in number of people shopping online for purchase of books, garments, toys, groceries, ticket booking etc.

In this market research report, we have studied some of the business strategies practiced in mainly two sectors: E-Commerce and Online ticket booking (travel industry). E-Commerce as whole includes selling of different products ranging from books to consumer goods. E-Commerce has promoted the growth of SMEs, as selling online has reduced showroom costs, increased mass reach and has helped in achieving economies of scale.

With advanced online payment system through net banking, debit cards, virtual credit cards and credit cards, ticket booking has increased specially for trains and airlines. Although some agencies are also offering ticket booking for buses and cabs which is currently seen as new market driven by consumer needs.

As part of academic endeavour in market research our team has conducted a comprehensive consumer preference survey for better understanding of strategies in these two domains.

Keywords: E-Commerce, online payment, ticket booking, Information Technology, Internet, Economies of scale

Index

Introduction

Over the past decade, the world has increasingly become a global marketplace. With the proliferation of inexpensive computers, mobile devices, tablets and internet connectivity, consumers around the globe have access to products that in the past would have been available only locally or regionally. It is now taken for granted that a teenager in Assam can effortlessly find and buy a book from Delhi which is previously inaccessible due to geographical barriers.

The online internet businesses are small but they have been growing at a very faster rate. With this rapid growth in online shopping an increasing number of global companies are eyeing the rapidly growing market in India. Not only this but some SMEs which have set up their online store have been driving revenues and looking for expansion abroad as well. While the internet penetration is low at just 10% of the overall population, the government is building infrastructure to increase and enable connectivity in metropolitan and rural areas (like deployment of fibre optical cables, reduction in charges of 2G and 3G services, providing data connections at lower rates, providing tablets and computers at much lower rate, etc.)

With these growing developments and expected increase in number of internet users (from present 10% to 30 % by 2017), it is interesting to see how online shopping growth will take place, what factors will be growth drivers, how consumer preference has been changing with regard to shopping, what strategies will be practiced by business catering to online shopping.

Keeping above views in mind, we have taken market research study on basically two online industries: E-Commerce and travel ticket booking, for analysing existing strategies in E-Commerce and online ticket booking, getting the consumer preference and identifying the effectiveness of certain online business strategies.

In literature review section we tried to identify exiting business strategies at global scale from which we have …

After literature review we have carried exploratory and conclusive research in research methodology section, which has provided with key information about consumer and their preferences. Primary and secondary research has been carried and certain tests have also been conducted for effectiveness of some of the strategies, results of which has been appended in annexure. Research methodology has been followed by analysis section where the data obtained in preceding section has been interpreted.

Conclusion part provides the final outcomes of this market research report followed by references. Finally, annexure contains the questionnaire design and its responses, along with SPSS tests and WIPER anti-plagiarism report

Literature Review

During the past few years, an increasing numbers of businesses have been using the Internet and other electronic media in conducting their marketing efforts, business transactions. This has given an impetus for development of electronic Marketing and e-commerce in a very dramatic and dynamic way. This has led to a paradigm shift in the way businesses are conducted.

Electronic Marketing (E-Marketing) can be considered as a new philosophy and a modern business practice involved with the marketing of goods, services, information and ideas via the Internet and other electronic means. Implementation of e-marketing by small business enterprises can change both the shape and nature of the business. Use of mobile telephones, e-mails, internet, and payment gateways not only creates a lot of opportunities by offering a wider market but also removes many threats.

The literature review on on-line businesses is difficult to conduct as the concept itself is still considered as an unclear concept for the majority of both researchers and practitioners. There is a dearth of clarity between concepts like: Internet Marketing, E-Commerce and E-Business. Many authors use these words interchangeably. There is a lot of mixing up in the nomenclature. For example: while Internet Marketing (IM) is defined as: "the use of the Internet to achieve marketing objectives and support marketing activities" (Eid, 2003: 1-5). Ecommerce can be defined as: "the trading of goods and information through the Internet" (Baourakis,et al., 2002: 581) which indicate that E-commerce includes: buying and selling on line, digital value creation, virtual marketplaces and storefronts, and new distribution channel intermediaries (Strauss and Frost, 2001). Moreover, E-Business is totally different from E-commerce, Internet Marketing and E-Marketing.

The relevant research materials related to on line businesses is highly distributed between various journals. For example most of the articles on E-marketing were published in the Journal of Small Business and Enterprise Development with a percentage of 7.4 % of the total number of studies conducted in the period 2003-10. This can be justified by taking into consideration that the literature had been conducted from a small business prospective.

The published articles primarily covered the following research areas: E-business, E-marketplace, Electronic Commerce, Electronic platforms, ICT adoption, Internet marketing, On-line trust, B2B, Performance evaluation, The Web, Electronic marketing, E-mail Making, E-readiness, E-relationships, E-security, E-service, E-supply chain management, Internet adaptation, Mobile marketing and some other research. Electronic Business was the major research area covered by researchers in the UK from 2003 to 2010 followed by Electronic Commerce, Internet marketing and Electronic Marketing.

Available literature clearly reflects that there are research gaps in the areas of E-Marketing performance as well as E-Marketing adoption in Small Business enterprises (SBEs). There is thus a need for conducting more research to investigate the relationship between implementing E-Marketing strategies and SBEs performance.

Researchers have adopted myriad approaches for assessing the mechanisms by which IT business value is generated and estimating its magnitude. It is revealed that the dimensions and extent of IT business value to an organization depends on a variety of factors, including the type of IT, management practices, organizational structure, as well as the competitive and macro environment. The research also suggests that the firms do not appropriate all of the value they generate from IT – value may be captured by trading partners or competed away and captured by end customers in the form of lower prices and better quality.

In the network era, electronic linkages within and among organizations are proliferating, changing the ways in which firms acquire factor inputs, convert them into products and services, and distribute the result to their customers (Hammer 2001;Straub and Watson 2001). This raises new questions about how IT can be applied to improve organizational performance. For example, how do electronically connected trading partners impact a firm’s ability to execute IT-based strategies for improved efficiency and competitive advantage? And how does the evolving competitive environment shape IT business value? Knowledge in this domain remains underdeveloped and unsystematic.

A review of the literature reveals that studies examining the association between information technology and organizational performance are divergent in how they conceptualize key constructs and their interrelationships

IT business value research is defined as any conceptual, theoretical, analytic, or empirical study that examines the organizational performance impacts of IT. Game theory has been used to examine the role of strategic interaction among competitors in IT business value generation and capture. In another view namely, resource based view the four conditions necessary for a resource to confer a sustainable competitive advantage are value, rareness, inimitability, and non-substitutability. The widely used production function approach relates production inputs such as labour, IT, and other capital to output via mathematical specifications derived from microeconomic theory. Other researchers have developed process oriented models linking IT to organizational performance.

The first domain is the organization acquiring and deploying the IT resource – the focal firm. The focal firm domain thus comprises the IT resource, complementary organizational resources, business processes, business process performance, and organizational performance. Three IT assets underlying a firm’s IT capability can be identified: human, technology and relationship.

Physical capital resources comprise plant and equipment, geographic location, access to raw materials, and physical technology, a subset of which is the technological IT resource (TIR). TIR can be further categorized into (1) IT infrastructure, i.e., shared technology and technology services across the organization; and (2) specific business applications that utilize the infrastructure, i.e., purchasing systems, sales analysis tools, etc. The separation of TIR into infrastructure and business applications is an important factor as firms view the two in different ways when making investment decisions and setting performance expectations

The second resource- the firm’s human capital refers to expertise and knowledge. Thus the second component of the IT resource is called the human IT resource (HIR). It denotes both technical and managerial knowledge. Examples of technical expertise include application development, integration of multiple systems, and maintenance of existing systems; managerial skills include the ability to identify appropriate projects, marshal adequate resources, and lead and motivate development teams to complete projects according to specification and within time and budgetary constraints. Though technical and managerial expertise is often intertwined, they are distinct concepts and their conceptualization is necessary in describing IT investment impacts. Human IT expertise may be associated with the entire technological infrastructure of the organization or may reside locally within business units and be associated with specific business applications.

Successful application of IT is often accompanied by significant organizational change including policies and rules, organizational structure, workplace practices and organizational culture. Business process-"the specific ordering of work activities across time and space and clearly identified inputs and outputs"- get changed. IT may not only improve individual processes, but also enable process synthesis and integration across disparate physical and organizational boundaries.

The organization of industries – concentration, supply chain configuration etc. – as well as their salient features – technological change, regulation, IT standards, etc. – can shape how IT is used within focal firm business processes to create IT business value.

Information technology increasingly permeates organizational boundaries, linking multiple firms via electronic networks and software applications and melding their business processes. Thus, trading partners increasingly impact generation of IT business value for the focal firm. For example, inefficient business processes and antiquated technology within trading partner firms may inhibit the attainment of IT business value of an inter-organizational system initiated by the focal firm.

The third and final layer is the macro environment, denoting country specific factors that shape IT application. Examples include government promotion and regulation of technology development and information industries, IT talent, information infrastructure. For example, though firms in developing countries face constraints in applying information technology in the areas of education, expertise, infrastructure and culture, in India due to a strong presence of IT executives, this issue is less relevant. Country factors emphasize the role in shaping the attainment of IT business value, especially salient to public policy makers. It highlights the need to better understand the specific elements that apply in differing political, regulatory, educational, social, and cultural contexts.

Many empirical studies using large-sample data sets find support for a positive association between aggregate measures of the technological IT resource and organizational performance. However, research also indicates that the operational improvements gained from applying IT within the organization may not translate to financial measures of performance. TIR or HIR confers a competitive advantage by itself. Emerging research further suggests that HIR enables operational efficiencies, though it is not clear whether managerial or technical HIR may underlie such results.

When complementarities exist between TIR and HIR, they are likely to lead to temporary competitive advantage. A temporary competitive advantage is likely from technical IT skills but a sustainable advantage from managerial IT skills. With the increasing maturity and institutionalization of IT service markets, even these managerial and technical skills and capabilities can be sourced externally. Thus, even if competitive advantage is achieved, it is not likely to be sustainable due to the possibility of imitation.

Empirically, decentralization of decision authority is found in greater application in firms with higher levels of IT investment. Moreover, firms with greater use of IT and emphasis on team work, decentralized decision making and wider breadth of job responsibilities are found to have disproportionately higher market valuations. However, synergies between IT and other organizational practices do not always exist.

Another set of organizational resources that may be complementary to IT are firm characteristics such as worker composition, size, financial condition, and culture. IT business value differs according to employee category – firms with higher IT investment that have also decreased their clerical and professional ranks have higher productivity. There is a negative association between firm size and price reaction to IT investments.

Data Collection Methodology

Research Objectives

Primary:

Find the existing strategies adopted by companies offering online services in retail and travel industry by doing secondary data study.

Find the customer preferences and perspectives which encourages or discourages a customer to get into an online purchase of products and services related to travel and retail industries.

Determine relationships among various dependent and independent variables using statistical tools and hypothesis testing.

Questions to be answered by the research:

What is the target market for the companies involved in e-commerce in retail and travel industries?

What are the important factors that have helped e-commerce grow, in these two industries?

What are the impediments and major challenges faced by e-commerce industry in these two fields?

Research Design

The research conducted by us is both exploratory as well as conclusive. On line businesses were segmented into Travel and Retail only and other online businesses were not part of this research. We carried out an extensive literature review of the on line business strategies in each of the sectors. Our research is primarily a problem identification research, as we have tried to find out the main deterrents and factors that encourage the users in getting involved in online purchase in these two fields. The data collected by us is both qualitative as well as quantitative in nature. We have used questionnaires as our tool to collect primary data. We have used multiple sources to collect secondary data.

After collecting the requisite data we have formulated our null hypothesis and used various mathematical tools to analyse the data.

Secondary Data Collection

From the data obtained from secondary sources (Avendus report, BCG Survey), following are some of the key points that come up:

With only a 22% internet penetration rate expected by 2015, the e-commerce industry is still in its very nascent stage.

Consumers, on an average, spend 30 minutes a day in India on the internet. With increasing internet penetration, faster internet speeds and easy access through low prices for laptops and tablets, this number is expected to grow rapidly.

There is an expected increase in the number of people in the age group of 25-34 and 45-54 having access to internet. Considering that these are groups with the highest income levels, this would mean higher spending capability in the future in e-commerce.

While the relative share of Travel in the entire E-commerce pie has increased, the sheer growth rate of the market implies a high growth rate for the e-commerce industry.

In contrast to popular perception, cash on delivery forms only 23% of the transactions conducted online. This means that the financial services’ companies have managed to make the payment processes robust enough online for customers.

Primary Data Collection

In order to get customer’s perceptions about the E-commerce industry in the field of travel and retail, questionnaires were designed, one for travel and one for retail industry. The questionnaires were floated on social media networking sites and through e-mails. The primary data collected was based on Convenience sampling, as people having access to internet and in friend lists of the surveyors on various social networking sites were targeted. Through this data collection, we intended to know the reasons that encourage or deter users from buying online.

Hypothesis Formulation

Ho: There is no relationship between gender and payment issues (ANOVA)

.

Ho: Sales and payment issues are independent (i.e., µ1=µ2, where µ1 is for people opting for online purchase and not concerned about payment issues and µ2 is for people opting for online purchase and concerned about payment issues.)

Sample Size

Primary research through questionnaire floated by email and from personal responses we managed to obtain the responses from 52 unique responders

Analysis

Survey to gauge usage patterns and preferences of internet users

We ran two parallel surveys, one to understand the customer’s internet usage patterns and internet usage preferences, and the other to know their propensity to making purchases through the internet on e-commerce sites and travel sites, and also to understand the factors that drive these decisions. We chose these two sectors as these are where maximum impetus in online activity has been observed.

E-Commerce

>18

18%

18-30

64%

30-50

8%

<50

10%

Demographics: Age split

Male respondents: 60%

Female respondents: 40%

Usage pattern

As observed from the collected data, 63% of our respondents regularly use the internet for e-commerce and 83% of them have made purchases online at some point in time. Frequency of purchase is however not very high, with as many as 44% buying products just once a month.

The buying decision

The single most important reason for people buying products online was the convenience of buying from home, with 73% of the respondents. The second and the third were ease of use and greater selection, 46% and 38% respectively. Both these factors are synergetic with convenience and go to show that the urban consumer is driven by ease of purchase and are not really afraid of safety issues regarding online purchases. In fact, 27% of the people surveyed said that safety of purchase was a driving factor for purchase.

The market

The clear leader in terms of the websites is Flipkart being used by 65% of the people, and E-bay, Myntra and Snapdeal each being used by 29% of the respondents.

Promotion effectiveness

Many of the e-commerce sites operate through advertising as the main revenue stream. To draw more people to their site, they give out promotional offers through social networking sites and emails. As many as 52% of the respondents, think that this kind of communication is spam. This shows that more than half of the people receiving this communication do not bother going through the details.

Obstacles

A majority of the respondents have had issues with the functioning of the website. 52% said they had faced issues with payment gateways and 38% had faced issues with the site not opening.

Alternatives

About equal number of respondents said that they use information on social media sites and blogs to make purchase decisions. This shows that different online platforms seem to be equally likely contact points for business to target. As many as 58% of the respondents said that they have used their mobile phones to make transactions. This is one of the areas that the business must look to tap at a very large scale especially with the increasing mobile penetration and the growing ease of such transactions.

Online Travel

Demographics: Age split

>18

18%

18-30

64%

30-50

8%

<50

10%

Male respondents: 60%

Female respondents: 40%

Usage pattern

As we can see in the above graph, 78% of our respondents regularly use the internet for e-commerce. The frequency of the booking in a year was as follows:

Once

20%

>3 times

16%

3-6 times

22%

7-10 times

18%

<10 times

22%

The buying decision

The single most important reason for people buying products online was the convenience of buying from home, with 62% of the respondents. The second and the third were availability of tickets and ease of operation, 52% and 42% respectively. All these factors show that convenience and availability are key factors in this sector.

Travel mediums by people booking

The market

The clear leader in terms of the websites is IRCTC being used by 70% of the people to book train tickets, and MakeMyTrip.com and Yatra.com being used by 36% and 34% of the respondents respectively. Redbus.in has been used by 32% of the respondents.

In terms of percentage of people booking for a particular medium of travel and comparing it to the performances of individual companies:

Train travel = 82% with IRCTC = 70%

Flight tickets = 42% with MakeMyTrip.com and Yatra.com

Bus tickets = 40% with Redbus = 32%

Thus we can see that all of the companies are doing equally well with respect to online booking compared to the popularity of online booking for their respective travel mediums.

Ratings on parameters for the online travel industry

We can observe that a majority of the people believe that this industry is good on different parameters of judgment.

Obstacles

The respondents in equal numbers said that security, payment issues and internet availability were issues that they faced while trying to book tickets online, close to 40% each. All of these are technology and perception related issues which must be tackled to bring the unfavourable numbers down.

Analysis of Secondary Data:

Given Below are some of the statistics we collected from research reports (source mentioned in the figure) about the trends in internet usage across the world.

Given below is the average time spent online by users.

Given below is the approximate age distribution of internet users.

Source : Comscore – State of the Internet with a focus on India (June 2011), Avendus estimates

Customer preferences for Payments

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From the data provided above, following are some of the key points that come up:

With only a 22% internet penetration rate expected by 2015, the e-commerce industry is still in its very nascent stage.

Consumers, on an average, spend 30 minutes a day in India on the internet. With increasing internet penetration, faster internet speeds and easy access through low prices for laptops and tablets, this number is expected to grow rapidly.

There is an expected increase in the number of people in the age group of 25-34 and 45-54 having access to internet. Considering that these are groups with the highest income levels, this would mean higher spending capability in the future in e-commerce.

While the relative share of Travel in the entire E-commerce pie has increased, the sheer growth rate of the market implies a high growth rate for the e-commerce industry.

In contrast to popular perception, cash on delivery forms only 23% of the transactions conducted online. This means that the financial services’ companies have managed to make the payment processes robust enough online for customers.

Conclusion

The meteoric growth of Internet based E-commerce and Travel Industry at the turn of the last century is truly baffling. During the last one decade, this market space has grown in several directions. In its first generation, it saw the emergence of portals and search engines. However, in due course more and more organisations began to cater to the Business to Customer (B2C) market. In the last two years, there is significant growth in the Business to Business (B2B) segment. As several organisations began to operate in the Internet market space, they innovated unique propositions to create value in the process. These were either not found or difficult to replicate in the traditional brick and mortar operation. With the proliferation of inexpensive computers, mobile devices, tablets and internet connectivity, consumers around the globe have access to products that in the past would have been available only locally or regionally. The unprecedented growth in Internet based business in a short period of time has underscored the need for understanding the mechanisms and theorizing the business models adopted by successful organizations.

In general, the benefits of ecommerce to the business are enhanced if the firm serves a niche market, takes advantage of service providers (public and private) to maintain an efficient and up-to-date e-commerce program, and integrates e-commerce into multiple aspects of the business operation. Most importantly, however, e-commerce must be viewed as an integral part of the firm's business plan. E-Commerce is not an "add on" activity like a Christmas advertising campaign. E-Commerce has the potential to significantly impact business operations, and the firm should plan ahead regarding resources needed (financing, labor, production capacity, warehouse space) to serve new markets and customers.

With these growing developments and expected increase in number of internet users (from present 10% to 30 % by 2017), it is interesting to see how online shopping growth will take place, what factors will be growth drivers, how consumer preference has been changing with regard to shopping, what strategies will be practiced by business catering to online shopping.