Online Consumer Behavior

Abstract

The current online retail industry in India is wholly driven by providing heavy discount to customers. This is done on the expense of huge losses to the companies backed by venture capitals and heavy investment from abroad. All companies are fighting to emerge as dominant players. Once the industry matures and investors starts seeking returns, discounts and offer won’t remain the basis of competition anymore as companies cannot continue bleeding money. We aspire to do research to create competences for online retailers to address new basis of competition which would be price optimization, brand value development and differentiation by analyzing customer behavior and data. In our research we have constructed a brand perception index (BPI) which represent overall perception and image of the online retailer’s brand. The BPI is constructed from various attributes of the retailer like delivery service, promotions, reliability, etc. The research gives an equation and the measure of influence of each attribute on the BPI. These measures can be used to make decision of investments to improve the brand image. In addition, we developed a method to use BPI for price optimization at online platforms. We used the PBI for each retailer and come up with a sensitivity function which gives the switching price difference required by customers to switch from retailers of high BPI to low BPI. This method can be used by retailers to gain market share by converting customers from price comparison sites. One more area of research was to investigate the customers’ behavior towards volume discounts over shopping carts. This can result in conceptualizing in a new e-retail model where discount is offered on entire shopping cart instead of individual products and is proportional to size of the cart. This would enable retailers to frame prices such that it won’t dilute the brand value and customer reference price of individual products. The retail model would create volume sale thus providing discount worthwhile unlike the current individual discount which is not sustainable.