1.

ONLINE SHOPPING
1.1. Online sopping as a rising trend
Online shopping first started in mid ‘90s in Europe and soon became popular there
for its various benefits. The trend of online shopping is increasing day by day. Online
shopping in India is evolving fast and has a chance to grow exponentially in the coming
years. Online shopping has spread into every corner of life linking people to the culture of
capitalism in frequent and daily ways. In general, shopping has always catered to middle
class and upper class women. Shopping is fragmented and pyramid shaped.
Online shopping is the process consumer go through to purchase products or
services over the internet. At present times, internet is playing a major role in removing
limitations of past, now a sales person can reach the doorstep and offer satisfying services in
a click. Advanced technologies and web application with safe transaction assurance are
giving enough reasons to the new age Indian buyers to shop online. Purchasing goods from
the comfort of your own living room certainly is more convenient than driving to a store.
Among the initial in internet selling was selling the books. What started as a trial-and-error
strategy-with many people wondering the feasibility of the success of web shopping-today,
has become a revolutionary industry worth billions.
An online shop evokes the physical analogy of buying products or services at a
bricks-and-mortar retailer or in a shopping mall. Establishing a store on the internet, allows
for retailers to expand their market and reach out to customers who may not otherwise visit
the physical store. The convenience for online shopping is the main attraction for
consumers. Online shopping allows people with a broad range of products indifferent
categories. It also gives a chance to compare the same product with the others and also
shows the best deals. The benefits of online shopping also come with potential risks and
dangers that consumers must be aware of.
Online shopping can be considered as sub category of e-commerce. Online shopping
revenue of India was $14 billion in 2012 and number of online shopping users are 19.2
million. Online shopping has doubled to $14 billion in 2012 from $6.3 billion in 2011. This
figure is likely to reach $38 billion by 2014.
As per the report of com Score, Inc, about 60% of internet users have visited a retail
site in the year of 2011. Online shopping has risen by a whopping 85% in 2013 as compared
to last year’s figure of 58.5 billion on increasing internet penetration, rising fuel prices and
wider choices in the comfort of one’s home. In this fast paced competition, the Indian online
shoppers have specific expectations for online shopping websites in India.
This research is conducted to study emerging trends of online shopping. This report
include the study of factors that influence consumers. This research also helps us to know
the effect of online stores on people’s lifestyles and also it includes study on various other
factors concerned. Report also takes into consideration the factors which forms the basis of
comparison made by the customers.

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1.1.1. Current scenario of online shopping in India

E-commerce was introduced in India in 2002 when government of India introduced

IRCTC online passenger reservation system. It allowed booking of tickets online at any time
and from anywhere. With the help of this system people can book tickets online with easy
payments, can check the status of their tickets and also look for ticket availability.
Today, online shopping has become a booming industry in India. India stands at
number five in e-commerce throughout the world. In Asia it holds second position. Today
marketers can promote their product and services using internet over a wide geographical
area. These days companies collaborate with discounts and daily deals sites so as to encash
upon rising trend of online shopping.
Google has estimated that in India there are more than 100 million internet users
and among them half of the users access internet for their purchases. It is predicted the
internet users base will rise up to 300 million by 2015. According to the associated chambers
of commerce and Industry of India, the online industry which is currently of Rs 2,000 crore,
is expected to grow at an annual rate of 35 per cent and touch Rs 7,000 crore by the year
2015.
According to estimates made by CRISIL, the sales over the internet are growing at
a rate higher than 50 per cent. KPMG reports that by 2020, e-commerce could be
contributing around 4% to India’s GDP.

1.1.2. Key drivers of growth of online shopping in India

The following are some of the reasons for the growth of online shopping in India:
 Increased access to internet services has made it possible for the people to make
their purchases online. Better and faster 2G, 3G and 4G services have boosted the
accessibility.
 Abundant choices of shopping sites provide wide range of products and services.
 Living standards of people in India have improved which has faster fuelled the online
shopping craze.
 E-commerce operates on huge scale and thus the products are offered at discounts.
Better deals offered by various sites have led to increased purchases made online.
Quality products are offered at discounted rates at these sites.
 Choice of payment methods has also eased online shopping. Payments can be made
through bank transfers, credit cards, debit cards or can be made on delivery.
 Behaviour of Indian consumers have also changed over the years. Consumers are not
using internet for booking their air or movie tickets, but are purchasing a number of
other products such as mobiles, furniture and even people are purchasing food
online.
 Busy lives leave people with less time to visit crowded stores. Online shopping allows
consumer to shop from the comfort of their homes. Shopping over internet can be
done with ease and saves lots of time.

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  Better and safer online shopping services have helped in gaining trust of consumers
who earlier hesitated in sharing their details while shopping online.
 Online shopping sites, these days, provide various facilities to their customers such
as exchange or return policies. Such policies have made online shopping more
attractive.
 Rise of social networks has accelerated the online shopping process. Marketers are
using social networks such as twitter, Facebook, etc to advertise and promote their
products and services. As a result, consumers have more information just at their
fingertips. It has led to increased transactions as these networks are famous among
the citizens.
 Various pages on Facebook and instagram offer various products at affordable prices
which has made online shopping famous among the young customers.
 The latest trend in M-commerce, large number of people own smart phones which
has made it easier for them to access internet through their mobiles. So brands have
also shifted to mobile advertising routes.
 Various sites have launched which enables comparison of prices over the entire web.
So users can discover best possible prices. Sales through these sites are increasing.

1.1.3. Challenges faced by Indian online retailers

There could be a huge difference in the click to sale ratio of many e-commerce sales
if they make the browsing experience hassle free. One of the biggest challenges is to offer
merchandise to the consumer in such a manner that he “feel like buying” instead of the site
“trying to sell”. Most of the e-tailers want the customer to register first, only then one can
enter the site. These are some challenges faced by online retailers:

 Show change in the buying behaviour: Indians are still reluctant to buy online and
prefer brick and mortar models. Indians still like have a feel of products and spend
time in buying.
 Inability of online retail players to sway customers from offline mode to online retail
channel. Lack of proper marketing and advertisement inability to create a brand
image, lack of proper usage of all possible online means like search engine, online
ads, pad marketing, social networking, blog, etc to reach the customers. Inability of
online retailers to drive the values a customer can derive by shopping on online
channels.
 Online portals are not up to the mark: There have been few lacuna’s in the exiting
online website like: poor front ends, website search options are not good, lack of
sufficient information about products and terms and conditions, slow websites, etc.
 Lack of seriousness: A lot of online portals have come up in India backed by major
retail distributors but, for many it seems to have been just a onetime setup. Post this
there hasn’t been enough drive to propagate the brand and services of the portals
among potential clients.
 Issues concerning security and transaction frauds: In addition many o the web
portals do not support all online modes of payments. There are high occurrence of
failed payments and this is often a deterrent for clients to revisit the portal.

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  Competitors are just a click away: When consumer search they have multiple
options available, and many use search to navigate the web rather than type in or
bookmark specific sites.
 Visitors can disappear in 15 seconds or less: Online consumers are goal oriented
shoppers. If they immediately find what they’re looking for when they reach the site
or landing page, they are gone in under 15 seconds.
 Shopping is a multistep process: Online consumers love to browse. Many spend a
fair bit of time visiting several sites just to gather information. They may also
compare the offerings of several competitors before hitting the ‘buy now’ button.
 Time between initial visit and purchase has increased: Increasingly financially
challenged consumers may wait longer before buying.
 Customers wait for merchants’ best offer: Having been seduced during the holiday
season with the shipping and handling and other price driven offers, consumers have
been trained to wait for a special offer.

1.1.4. SWOT analysis

Most of the time we see that the use of electronic techniques for doing business add
value either by the reducing transaction cost or by creating some type of network effect, or
by a combination of both. In SWOT analysis, here we try to find out the strengths and
weaknesses of e-commerce in respect of Indian business environment.

STRENGTHS
An e-commerce company’s strengths are unique points which show their difference
from their competitors which can increase a company’s strength.
 Convenience: E-Retailers are moving towards enhancing the convenience factor and
thus attracting the shoppers to use this channel. Moreover the growth of the mobile
communication has led to the growth of the e-retailing as people are more
accessible 125 to internet 24 x 7. Like in the case of purchasing from the physical
market, we have to wait for the shop to open and certainly we try to get our
merchandise before the shop closes, but in case of online retailing there is no time
limits involve all you need is an internet connection and money in your pocket to pay
the price.
 Time saving: A shopper saves a good amount of time by shopping online. In the
metros and even in the smaller towns which are growing fast, the life of an average
person has become very fast. He has very little time after his normal routine office
schedule to go to the market and purchase even the daily needed items.
 Price/Product comparison: Helps consumers to compare prices and product without
having to move from one shop to another for comparing the benefits of the product,
the shopper gets the benefit of comparing the features and cost analysis at one
place. Most of the sites are providing this facility where in shopper can choose the
product which exactly suits him.
 Cost effective: Reduces logistical problems and puts a small business on a par with
giants. Lowers transaction cost can be automated in a well implemented online

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 store. If an online download facility is available, then distribution cost can be cut off.
E-Retail business start-up costs is more economical because both kinds of new start-
ups have low income at the start.

WEAKNESSES
 Security: Security matter confuses customers especially about the integrity of the
payment process. In an electronic environment where market needs, technology
requirements, and security challenges change very rapidly, proactive risk-handling is
essential. Unfortunately, no matter how strong your extranet defences are, it is
always possible that a new exploit could defeat your best efforts to secure the web.
 Fake websites: Fake websites can not only disgrace e-retail but bring bad name to e
commerce also.
 Fraud: Concerns about misuse of financial and personal data are a great weakness in
e-retail. Long delivery timing.
 Delivery time: It can be in days or weeks which one cannot wait for. Supplier
selection is extremely important in purchasing management to enhance quality,
reduce delivery time, and to curtail purchasing cost.
OPPORTUNITIES
 Convenience: Normally, online stores are usually available 24 hours a day, and many
consumers have internet access both at work and at home.
 Price and selection: One of the biggest advantages of online shopping is to find out
quickly deals for items at services with many different vendors. Search engines , on-
line price comparison services and discovering shopping items can be used to find
out sellers for a particular products or services. Some retailers also offer free
shipping on sufficiently large orders. Searching an online catalogue can be faster
than browsing the physical catalogue of a brick and mortar store.
 Market research: Retailers can use their online presence as a tool to gain valuable
customer information to forecast future customer demand. Baker (2005) has
pointed out that online market research has some powerful advantages, such as
monitoring real-time buying decisions. In addition, online customers have the
knowledge and experience necessary to answer the questions, which produces more
accurate and reliable data.
 Online customer service: In India, websites are becoming new channels for
conducting customer service; therefore their general acceptance level will increase,
due to the benefits provided to customers. For example, a customer could ask for a
product introduction or a personalised product in the pre-purchase stage, and could
also check the delivery status online. All such services can be available uninterrupted
online.
THREATS
 Competitors: Competition is increasing day by day big companies have already
entered in this field. They are making people habitual at the cost of their companies.
The threat from online competitors is leading more traditional retailers to consider
embracing even seemingly outlandish technologies.
 Changes in environment, law and regulations: Change in trends, fashion and fad can
distress e-retail side by side change in law and regulations can also affect. E-retail

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 industry usually cannot influence or change the macro environment and must adapt
to changes as they arise. Government policies can also hinder e-retail businesses by
imposing regulations that increase costs, such as requiring the development and
integration of new systems or procedures.
 Innovation: Customers now days are always in a search of innovative products.
Innovation can be either in product, place, promotion and even price. If e-retailer
doesn’t innovate, its survival is at stake. Innovation in leveraging technology that 129
needs updated or replaced. Technology and system capabilities are changing and
innovative solutions leave IT departments scratching their heads as to how to keep
up.
 Privacy concerns: Fears that information can be misused lead to spam e mail or
identity fraud. Many consumers have ceased purchasing goods online or have never
started because of concerns over the privacy and security of their transactions and
click habits.
 Fraud: Persons using unfair means to operate e commerce can damage the
confidence and faith of common people. E-retail so heavily on the Internet, many
fraud examiners are consulted for fraud information.
1.1.5. Product category trends

The product category is an important concept because product categories help

marketers do many useful things. As we will learn later, product categories provide a
starting point for market segmentation. Product categories help marketers identify potential
sources of competition, and by extension, opportunity. Product categories help marketers
position their products and promote them more effectively. In this section, we’ll look at the
meaning of product categories with the goal of introducing some metrics and tools useful
for analysing a firm’s current category or other categories that may be attractive to the firm.

Category Size
An obvious place to start is to consider the size of the product category. While this
may seem relatively straightforward, it can become somewhat more complicated. Given the
previous discussion about benefits and product categories, bear in mind that some firms
would need to consider category size from potentially unusual perspectives. For example, if
Rolex decided to try conceptualizing its product category as “engineered precision luxury
items,” then the category would be much broader than its traditional competitors. Getting a
handle on a useful measure of size may be difficult and would require some judgment calls.
Product sales: The most commonly used measure of category size would be how much
product was sold in the category. Product sales may be measured in units or in dollars. The
decision on which to use may rest in part with the role of price in sales. If prices among
competitors in the category are relatively similar or if price does not vary much due to
negotiation or discounts, then either unit sales or dollar sales are appropriate measures of
category size. However, if prices fluctuate or cover a broad range among legitimate
competitors, then unit sales may be a better measure of category size.
By either measure, large category size does not automatically equate to an attractive
category. Large categories may have attracted large competitors, which may require large
resources to get in or stay in. If so, companies eyeing these opportunities must have

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something compelling to offer customers and they must have the resources to promote and
distribute it. If the category is crowed, they must also have the ability to cut price, because
large crowded categories compete with discounts until some weaker competitors are
shaken out.
Number of customers: A more unusual take on category size is the number of customers
who actually purchase in the category. This take on category size intersects with the notions
of market and sales potential, as customer valuation, all of which we will cover later.
However, the simple truth that not all customers are equally valuable to companies. The
question from a category size perspective is whether less valuable customers can be made
into more valuable customers. If the overall number of customers and the proportion of
them that are not particularly valuable are both relatively high, then this measure of
category size may be useful.

Category Growth
If a firm currently operates in a slow growing category or is evaluating new
categories for expansion, category growth will be key for evaluating long term prospects.
Here we view category growth from two perspectives. First is growth itself, which is a
relatively simple matter. Second is the growth rate in light of the category’s stage in the
product life cycle.
Calculating Category Growth: The formula for calculating a growth rate is straightforward
enough and is given by the simple formula below where t represents the current time
period.

𝐺𝑟𝑜𝑤𝑡ℎ 𝑖𝑛 𝑆𝑎𝑙𝑒𝑠= (𝑡)−𝑆𝑎𝑙𝑒𝑠(𝑡−1) *100

(𝑡−1)
The formula calculates what percentage category sales have grown from the previous to the
current period. Importantly, the unit chosen for t depends on the circumstances. Usually
with category growth, managers rely on years, however, quarterly or even monthly sales
data may also be useful. Whatever unit is chosen, a single growth calculation will not paint a
good picture of what’s happening in the category. At least three period of growth
calculations are necessary to even imagine a trend and even this is not much data. Ten years
would be closer to a satisfactory amount. This way growth can viewed over a longer period
to see whether any observed trends are likely to be transitory.
Growth and the Product Life Cycle (PLC): Many people erroneously believe that product life
cycles are evaluated for individual brands. This is not the case. The PLC is intended to be a
tool for evaluating product categories. That’s because much of the changes in PLCs over
time come from the introduction and removal of competition, which by definition requires
more than one firm.

Category Capacity
Category capacity is a fancy word for the concept of supply. We recall from economics
that when demand exceeds supply, prices rise and surpluses drop; when supply exceeds
demand, prices drop and surpluses rise. When it comes to entering or remaining in product

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categories, the amount of supply or capacity in the category is critical as is the timing. As
economic theory describes, over time supply and demand try to match each other in what
economists refer to as equilibrium. Equilibrium occurs when supply just matches demand at
a price that just clears the market with no surplus and no unmet demand. In the real world,
of course, this does not happen except when considered in the long term.
In the context of category capacity, we think of this as attempting to match sales
with capacity. The issue is frequently that capacity takes time to create. For example,
consider cruise line cabins. If cruise lines are selling out at prices that meet or exceed profit
goals, they or new entrants have an incentive to add capacity. The problem is that, this case,
capacity may take several years to add, and conditions may change in the interim. Generally
speaking, manufacturing capacity takes time to add while retailing or distribution strategy
may be added more quickly.

Competitive Intensity
Category attractiveness can also be evaluated in the context of Harvard University
professor Michael Porter’s (2008) famous “Five Forces Model.” Porter’s model predicts the
conditions that increase competitive intensity in a product category. The more intense the
competition in a category, the less attractive the category is. Porter demonstrates that
intensely competitive categories are less profitable, which makes sense. Competition may
save consumers money, but it costs firms money.
Powerful customers mean lower prices for the goods they purchase. Wal-Mart is
now the classic example of this; the discount chain has a reputation for beating up suppliers
to save every penny possible. Large buyers or categories where there are few buyers
typically increase buyer power. Also, when buyers can easily switch to other suppliers tends
to increase their power. Powerful buyers tend to pit their suppliers against each other,
increasing competitive intensity in the category. An analogous set of circumstances increase
supplier power in a category. When suppliers are few or suppliers have high market share,
they tend to have high bargaining power. Suppliers selling highly differentiated products
tend to have more bargaining power because the differentiation makes their products
relatively unique.

1.1.6. Future growth prospects of online shopping in India

India is developing rapidly and if development is to be measured, how can we

ignore the role of e-commerce in it. The internet user base in India might still be a mere 100
million which is much less when compared to its penetration in the US or UK but it's surely
expanding at an alarming rate. The number of new entrants in this sphere is escalating daily
and with growth rate reaching its zenith it can be presumed that in years to come,
customary retailers will feel the need to switch to online business. Insights into increasing
demand for broadband services, rising standards of living, availability of wider product
ranges, reduced prices and busy lifestyles reveal this fact more prominently thereby giving
way to online deals on gift vouchers. Going by the statistics, the E commerce market in India
was worth about $2.5 billion in 2009. It rose to $8.5 billion by 2011 thus depicting a definite

8
surge in the last two years. According to a statement released by the Internet and Mobile
Association of India (IAMAI), these figures would reach up to $12 billion by 2012! To
understand this scenario, we can divide E-commerce into three broad categories which
include physical services, physical goods and virtual goods. Another category that is
gradually making its mark is local commerce (couponing, yellow pages, classifieds etc.)
which offers significant overlaps with E-commerce. The 1st category of physical services is
definitely the major contributor which includes travel ticketing, jobs, matrimonial and event
management websites with travel sites accounting for 75% of all E-commerce industries! It
provides attractive deals too.
The 2nd category of physical goods is the one currently gaining considerable
attention, thanks to the hype created by new start-ups/stores being launched daily. Leaders
in this division are Flipkart, Infibeam, Homeshop18, Indiatimes, Naaptol, Letsbuy etc. each
of which offers everything from mobile phones to pet food.
The 3rd and final category of virtual goods and gift vouchers like online music,
software's, movies, games, Taj Hotel gift vouchers, Reebok gift vouchers, Pizza Hut gift
vouchers etc. have been relatively lagging behind in India as compared to Europe and
America, primarily due to piracy concerns and the social perspective of Indians. But the
scenario is expected to change with the digital downloads segment expected to grow in the
Indian E-commerce market due to the explosion of mobile devices and the services available
over the Internet at special discounts.
Certain unique attributes of the E-commerce industry in India such as cash on
delivery mode of payment and direct imports that lower costs considerably are probably
going to bring about a speedy growth in this industry in years to come.
According to the latest research by Forrester, a leading global research and
advisory firm, the e-commerce market in India is set to grow the fastest within the Asia-
Pacific Region at a CAGR of over 57% between2012-16. The report, titled “Asia Pacific Online
Retail Forecast, 2011 To 2016,” has been issued by Forrester Research Inc. Analyst Zia
Daniell Wigder, with Steven Noble, Vikram Sehgal and Lily Varon.
The report found that nearly 60 per cent of citizens in India visited a retail site in
November 2011, with the number of online shoppers increasing by 18 per cent in the past
year. E-commerce can became an integral part of sales strategy while it is one of the
cheapest medium to reach out the new markets, if implemented successfully, it offer a
smart way of expansion & doing e-commerce attribute to the successful implementation to
carefully understanding the products & services, customers and the business process, easy -
to-use system to extend the business on the web.
The e-commerce platforms maximize its reach to the potential customers and
provide them with a convenient, satisfying & secure shopping experience.

1.2. Rise of international trade and e-tailers

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 Throughout history we can see that trade has been the driving force of progress
and the tool to spread innovations and discoveries. Ancient merchants travelled many days
and long distances to find exotic and unique items in order to increase their wealth. For
these people trade was a way of live. It is known that some tradesmen were richer than
their rulers. An unknown trader, whose life was described in a book called “Isaac the Jew”,
written in 10th century by the Persian author Buzurg, had a cargo worth an estimated
million dinars – an incredible amount given that a middle class family could have subsisted
on 24 dinars per annum (Clarke,2015).
The term e-commerce is quite broad, but the definition is given alongside the
context of the research. In the beginning, a historic overview is presented. The fundament
of e-commerce is the Internet. The commercial use of the Internet was only allowed from
the early 1990. Thus, it is agreed that the evolution of e-services started around that time.
Among the first large commercial parties taking advantage of the Internet possibilities were
Dell, Cisco and Amazon. A few years later, however, many business organizations were
attempting commercially onto the Internet, leading to an escalation of e-commerce.
E-commerce includes any practice of electronic economic activities, such as
Web services, or even merely a presence of web information with the possibility of leading
to transactions with the help of telephone and fax machines (Coffee, 1998; Riggins and
Rhee, 1998; Riggins, 1998). This understanding of e-commerce is quite outdated.
Industry organization supporters and the economic efficiency theory suggest
that Ecommerce is able to reduce the transaction costs and search costs (Kalakota and
Whinston, 1997; Tapscott, 2000; Janssen and Sol, 2000). It will further accelerate the shift of
power toward the customers, which will lead to perfect competition, and therefore reduce
the overall profitability of the firms and the industry as a whole (Slywotzky, 2001; Porter,
2001).

1.2.1. E-tailers dominate online market place

The digital e-tailing ecosystem comprises several components as follows:

Micro Environment: Micro Environment involves individuals or organizations that a firm
deals with on a regular basis as suppliers, competitors, customers, intermediaries and
employees. They all have direct interest in the activities of the firm and are clearly affected
by its actions.
Suppliers: Supplier is a person or entity that is the source for goods or services. A supplier
adds specialized input to deliverables.
Customers (Oxygen of business): It is necessary to understand and supply what customer
need, apply analytics program to record the statistic of customers and identifying the buyer
behaviour.
Intermediaries: An intermediary is a third party that offers intermediation services between
two trading parties. The intermediary acts as a conduit for goods or services offered by a
supplier to a consumer.

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Employees: Employees relate to human resources that are so important especially in the
new field of doing business through internet systems. It requires the capability to learn new
think and act fast. That helps create competitive advantage for the company.
Competitor: The presence of one or more competitors can reduce the prices of goods and
services as the companies attempt to gain a larger market share. Competition also requires
companies to become more efficient in order to reduce costs.
E-Catalog: It is a database of products with prices and available stock.
Shopping Cart: The customers select their goodies and fill shopping cart. Finally, as in a real
store, at the time of checkout, the system calculates the price to be paid for the products.
A payment gateway: Customers make payments through his/her credit card or e-cash. The
payment mechanism must be fully secure.
Support Services in E-Retailing: The electronic retail business requires support services, as a
prerequisite for successful operations. These services are required to support the business,
online or offline, throughout the complete transaction-processing phases. The following are
the essential support services:
Communication backbone
Payment mechanism
Order fulfilment
Logistics
Macro Environment: Macro environment involves factors outside of direct control of the
business such as the economy, government policy, and social change. Society is the factor
that impacts on the consumers ‘habit the most and influence on customer‘s belief and
psychology that lead to decision of buying online or not. The speed of developing internet
and technology in each society, each country decides the method of doing business at the
modern time.

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 2. OMNI-CHANNEL RETAILING
Omni-channel retailing is the concept of complete integration of all channels and it
has developed as an extension of multi-channel retailing (Klosek, 2012; Frazer & Stiehler,
2014; Rigby, 2011). The development of the concept has been driven by several factors
discussed in the following section 2.2.1. The goal of implementing omni-channel retailing is
to combine the benefits of both the digital and the non-digital retailing in order to give the
customer a seamless retail experience (Rigby, 2011). As mentioned in the previous section,
advantages related to online sales includes price transparency, the availability of reviews
and unlimited selection of products while benefits related to offline retailing are for
example face-to-face interaction, instant gratification and a hands-on product experience
(e.g. Grewal et al., 2004; Agatz et al., 2008; Rigby, 2011). Consequently, an online channel
can in many ways complement an offline channel, and vice versa, which has lead several
authors to claim that increased integration of the retail channels creates several types of
synergies (Agatz et al., 2008; Herhausen et al., 2015; Görsch, 2000; Steinfield, 2002). This is
something that many customers place great value on and hence, a successfully
implemented omni-channel strategy with total integration, has the potential to greatly
enhance the customer shopping experience (Herhausen et al., 2015).

2.1. Setting the stage for omni-channel retailing

. As mentioned, omni-channel retailing emerged as an extension of multi-channel
retailing. Although several factors have influenced this development, there are some in
particular that have been identified to have a more significant impact. These will be
explained in the following section.

2.1.1. Technological developments

Omni-channel retailing is closely linked and driven by technology as more advanced

technology allows for better integration of the retail channels (Oh, Teo & Sambamurthy,
2012). Customers have changed their shopping patterns as a result of their changed use of
technology, in combination with the increased availability of e-commerce (Kumar et al.,
2012). Smartphones and tablets are central to this new way of shopping and therefore the
retailers have had to take these technologies into account while designing their new
strategies (Brynjolfsson et al., 2013; Frazer & Stiehler, 2014).

2.1.2. Changed customer shopping patterns

The customers of today have the ability to stay constantly connected to the global
marketplace, which allows for easy price and product comparisons (Strang, 2013;
Brynjolfsson et al., 2013). Today’s customers are therefore becoming increasingly
demanding and expect to have a wide product selection available at all times (Piotrowicz &
Cuthbertson, 2014; Capgemini Consulting, 2014). This has contributed to changing the way
they search for information and thereby affected the purchasing process that they engage
in. They “are combining various channels and approaches, searching online to buy offline,
searching offline to buy online— and everything in between” and expect to get both

12
customization and convenience from their shopping experiences (Wind & Mahajan, 2002, p.
65; Oh et al., 2012). An example of this is how the use of multiple shopping channels
throughout a single purchasing process is becoming more and more common (Kalyanam &
Tsay, 2013).
One concept that has evolved from this is the one of ‘webrooming’ (Bell, Gallino &
Moreno, 2014). This concept refers to customer that research the products online before
visiting the store to purchase the product (Brynjolfsson et al., 2013). Gulati and Garino
(2000) explain for example how Office Depot increased its physical store traffic by making
information on store location and in-store inventory availability accessible from the website.
Providing the customer with this type of information has also in other cases proved to be a
successful strategy to increase store traffic (Bell et al., 2014). The improved accuracy of the
online information allows the customer to thoroughly research the product from home and
then visit the physical store to evaluate the non-digital components of the product and, if
satisfied, purchase the product in-store (Brynjolfsson et al., 2013).

2.1.3. Customer centricity

“Today, nobody owns the customer. The customer owns you” (Galbraith, 2005, p.
1). This statement illustrates the reality for most retailers today and there is little doubt that
the customer is becoming increasingly influential on the activities of companies, which are
consequently becoming more and more customer-centric (Agatz et al., 2008). Customer
centricity is a strong driver of omni-channel efforts as the retailers choose to implement an
omni-channel strategy with the aim to provide the customer with a seamlessly integrated
shopping experience (see more in section 2.2.3.1). The term customer centricity is about
creating value for your customer rather than how to sell your products, which is the case in
a product-centric organization where all organizational activities are organized around the
product of the company (Shah, Rust, Parasuraman, Staelin & Day, 2006). In a customer-
centric organization, the firm must “literally organize around the customer” and have the
ability to conduct business according to the preferences and wishes of the customers in
order to build a relationship (Galbraith, 2005, p. 5; Gummesson, 2008). Galbraith (2005)
means that this requires a close collaboration and interaction with the customers across all
contact points and to then use the results of these integrative activities to reach consistency
in the eyes of the customer. Shah et al. (2006) emphasize this further and argue that the
ultimate customer-centric company integrates and aligns all its functional activities to
deliver the best value to the customer.
Several authors agree on the fact that companies will have a hard time to
survive in the twenty-first century unless they move in this direction of customer centricity,
since it is the key to achieving sustainable and long-term growth, profitability and customer
loyalty (Selden & MacMillan, 2006; Galbraith, 2005; Gummesson, 2008; Shah et al., 2006).
Moreover, organizations should be willing to invest in business models that are value-adding
for the customers since these are in general difficult for competitors to imitate (Teece,
2010).
2.2. Areas of omni-channel integration

13
 The integration areas related to omni-channel spans over all the different
functions involved in the retailers business activities, for example, shipping services,
logistics, sales tools, promotional activities and performance measurements etc. (Avensia,
2014; Bell et al., 2014; Brynjolfsson et al., 2013; Cook, 2014). Examples of shipping services
and logistics integration are click-and-collect, in-store returns and in-store packing of click-
and-collect orders (Piotrowicz & Cuthbertson, 2014; Napolitano, 2013). Omni-channel sales
tools include the use of technology such as tablets and in-store screens (Herhausen et al.,
2015). Omni-channel promotion is related to providing consistent information to facilitate
and encourage combined channel use (Oh et al., 2012). Finally, performance measurements
related to omni-channel initiatives involve finding ways to measure the results generated by
this strategy (Cook, 2014). According to Oh et al. (2012), this type of integration is not only a
way to provide a seamless experience, but also a way for the retailer to strengthen the
relationship with the customers and thereby enhance the firm performance.
Below is a table summarizing some of the main omni-channel initiatives related to these
areas of integration. The table is based on the omni-channel literature although the main
criteria have been derived from the Avensia report (2014), however, some modifications
have been made.

2.3. Motivators of omni-channel retailing

There are several motivating factors as to why a retailer would decide to
implement an omni-channel strategy. These will be presented and explained in detail in the
following section.

2.3.1. Customer demand

Retailers that have chosen to implement omni-channel retailing do so with the

aim to better respond to demands of the customers and thereby also increase their level of
satisfaction. This is associated with one of the most frequently mentioned benefits of omni-
channel retailing, which is to provide the customer with a seamlessly integrated shopping
experience starting from the initial need recognition until the final receipt of the product
(Capgemini Consulting, 2014; McCormick et al., 2014). McCormick et al. (2014, p. 281) refers
to this as “looking at consumers’ combined channel experiences rather than examining
channels in parallel with one another” meaning that the customers should be able to
combine the use of the different channels in whichever way they find suitable for their
purchase. This is further supported by Wind and Mahajan (2002, p. 70) emphasizing the
importance of offering all possible combinations of the different channels since many
customers want to have the option of using all the channels and to “call, click, or visit”. This
includes everything from pick-ups and returns of online purchases in the physical stores, to
personalized help from knowledgeable sales staff as well as convenient online checkout
procedures (Zhang et al, 2010).
By providing the customer with a higher service level, the retailer is more likely
to reach a high level of customer loyalty, which is crucial within retailing. According to
Wallace et al. (2008) customer retailer loyalty refers to when a customer prefers a certain

14
retailer over its competitors. Implementing omni-channel strategies may have an effect on
this as customer loyalty tends to increase with personalization and seamless integration
(Zhang et al, 2010). A study conducted by Srinivasan, Anderson and Ponnavolu (2002)
suggest that customization, choices and convenience along with a sense of community all
contribute to increased customer loyalty. This is further supported by Zhang et al. (2010)
claiming that customer loyalty can be built by gathering customer information and using it
to offer the customer a well-adapted and personalized shopping experience. These
characteristics are all central elements of creating an omni-channel experience.
In addition to this, it is more likely that a satisfied customer becomes loyal to a
retailer offering multiple shopping channels since there are more possibilities for the
company to give good customer service and adhere to complex customer needs through a
“synergistic combination of service outputs” (Wallace et al., 2008, p. 258). However,
different customers prefer different shopping channels. More importantly, some customers
prefer certain channels for certain parts of the purchase process. This is emphasized by
Görsch (2000, p. 8) who states that “customers may choose the channel for each individual
function and not for the complete purchase process”. Thus, by providing the products
through various complementary channels, the retailer can offer a better service to its
customers and consequently enhance the satisfaction among these (Wallace et al., 2004).

2.3.2. Increased sales

According to Zhang et al. (2010) the reason retailers choose to offer more than
one channel is essentially the hope to reach higher profits through increased sales and more
efficient operations. The reasoning behind this is that there are more customer touch points
and thus more opportunities to adhere to different customer demands and a retailer
“expands both the quantity and possible combinations of service outputs available to its
customers” by offering various shopping channels (Wallace et al., 2004, p. 251).
Offering the customer more options regarding the point of purchase and return increases
the availability and accessibility and by reducing the boundaries between the channels. This
could, in combination, increase sales of the retailer (Capgemini Consulting, 2014; Lewis,
Whysall & Foster, 2014). Zhang et al. (2010) refers to this as gaining access to new markets,
which means reaching customers that otherwise would not be able to purchase the
products. It also allows you to expose customers to new products that they otherwise might
not have come in contact with (Brynjolfsson et al., 2013). Furthermore, Rigby (2011)
highlights the potential of increased sales by complementing the online and offline channels
instead of having them competing with one another.

2.3.3. Optimizing the physical channel

Omni-channel retailing presents a great opportunity for physical stores to

strengthen their role in the supply chain. One example of this is to use the store as a mini-
fulfillment center. This term refers to the use of the physical store as an additional
distribution and storage facility where the customer can pick up online orders or where the
retailers can ship online orders straight from the store to the customer (Napolitano, 2013;

15
Giannopoulos, 2014). These can vary in size depending on the needs of the retailer and the
capacity of the physical store (Napolitano, 2013). One example of a retailer that has
implemented this strategy is Macy’s Inc. The company has started to “rethink its brick-and-
mortar stores” and has transformed more than 50 percent of its 840 stores into mini-
fulfillment centers in order to better serve online sales and making more productive use of
the physical shops (Banjo & Fitzgerald, 2014).
Using the physical stores as mini-fulfillment centers has several advantages. First
of all, it makes it easier and more cost efficient for the retailers to offer next-day home
delivery due to a decrease in geographical distance to the customer (Napolitano, 2013).
Additionally, the use of in-store pickup and ‘ship from store’ allows the retailer to make
better use of its existing inventory, and thereby decrease the excess stock that otherwise
risks to be sold at a reduced price (Giannopoulos, 2014). Offering the customer the option
of in-store pickup also allows the retailer to save some costs since the ‘last mile’ in product
delivery is a relatively expensive part of the distribution for the retailer (Agatz et al., 2008). If
the customer do the pick-up in store and bring the merchandise home, the company can
minimize this expense. In addition to reducing the costs, in-store pickups comes with the
advantage of increased store traffic which provides an opportunity for the sales personnel
to achieve additional sales (Zhang et al. 2010).

2.4. Challenges of omni-channel retailing

Even though there is little doubt of the fact that omni-channel retailing comes
with many opportunities for retailers, there are also several challenges that they are faced
with as they move towards a higher level of integration among their channels. The following
section will provide a discussion on these.

2.4.1. Technological investments

Establishing an omni-channel strategy increases the complexity of managing the

operations and the supply chain of the retailer. The fact that this type of strategy is highly
dependent on investing in integrative technologies is a reason why some retailers are
hesitant toward its implementation (Herhausen et al., 2015). Furthermore, DeSanctis &
Poole (1994) mean that technology might not always live up to the expectations of the
organization and thereby adds to the level of hesitation. The increased complexity resulting
from an omni-channel requires for example advanced Warehouse Management Systems
(WMS) in order to keep track of the inventory at all times, and meet the customer’s demand
of quick and on-time deliveries (Zhang et al., 2010). This also requires the involvement of
skilled IT personnel in the reengineering of the business processes (Frazer & Stiehler, 2014).
Furthermore, implementing new systems does not only require skills, it is also a major
financial investment that managers need to consider (Herhausen et al., 2015).
Wind and Mahajan (2002, p. 71) state that “people are complex, retaining the same
enduring human needs even as they adapt new technologies and behaviors”. Thus, it is
important that retailers find a balance between these. Simply adopting and acquiring the
newest technology might not always be the right recipe to success. It is also crucial that the

16
technology is well tested and developed before it gets implemented so that the customers
do not experience any technical issues, since these type of problems have proven to
distance the customers from the retailer (Piotrowicz & Cuthbertson, 2014). Furthermore, it
is in general important to ensure that both the company itself, and the market will be
receptive towards the new technology (Probert & Shehabuddeen, 1999; Davis, 1989).

2.4.2. Change management

Implementing an omni-channel retailing approach can be difficult if the

organization does not manage to convey the benefits of the change for the organization as a
whole, and convince the different departments to move the focus from their individual
performance towards the performance of the whole corporation (O’Heir, 2012). This is
something that requires change management. Moran and Brightman (2001, p. 111) defines
change management as “the process of continually renewing an organization’s direction,
structure, and capabilities to serve the ever-changing needs of external and internal
customers”. Managing change is not an easy task, particularly not in large organizations with
a lot of people are involved (Worley & Mohrman, 2014). This is further emphasized by e-
commerce manager Jenny Vesterlund at Kicks, one of the Swedish retailers that according
to the Avensia report (2014), has come furthest in their omni-channel efforts. She states
that “it’s important to have everyone in the organization onboard, including the
headquarter, as well as everyone in the physical stores” in order to succeed in your efforts
(Postnord Logistics, 2014). Also the authors Sirkin, Keenan and Jackson (2005) highlight how
the commitment of both top management and employees is an important factor in
determining the outcome of the initiative.

2.4.3. Channel conflict

Issues that are often mentioned in relation to multi-channel retailing are

channel conflict and cannibalization which can be of great concern to retailers who are
planning to increase the integration of their channels (Webb, 2002; Agatz et al., 2008).
Conflicts of this type usually arise when resources such as staff, technology and capital are
scarce, or when goals are incompatible (Webb, 2002). The efforts to minimize inventory can
for example result in a channel conflict regarding the decision of which channel that should
get priority of limited inventory (Napolitano, 2013). The more channels the retailer has
established, the more complex the inventory management gets (Kumar et al., 2012). Some
retailers have been reluctant to add new channels as they are worried that doing so would
move their customers from their current channel into the new one and thereby cannibalize
the sales instead of increasing total sales (Agatz et al., 2008).

2.4.4. Return management

Returns are inevitably part of supply chain management and retailing and
consequently something that retailers have to manage. However, the integration of online
and offline retailing has taken this challenge to a new level because the online return rates
are much higher than the offline since the customers do not have the possibility of touching
the product before making a purchase (Agatz et al., 2008; Bell et al. 2014). This causes a

17
challenge in the reverse flow of the supply chain, which occurs when the customer returns
an online order in-store. Since the assortment is wider online, it is likely that the customer
will return an item that the store normally does not carry, meaning that the item must be
shipped back to the warehouse; an expense that the retailer has to cover in this situation
(Zhang et al., 2010). Furthermore, the supply chain of physical stores is typically not
designed to handle the increased amount of returns originating from e-commerce (Grewal
et al., 2004). It is therefore very important for the retailers to carefully determine how to
design their return policy in order to find the right balance between cost efficiency and
being able to offer the customers the highest service level possible.
Better and clearer information on the website has proven to be an efficient way
to decrease the returns of online orders since this type of returns typically occur when the
ordered item does not live up to the expectations (Bell et al., 2014). If a retailer manages to
design an efficient product-return system, large cost-savings can be generated from reduced
transportation, warehousing and inventory costs (Min, ko & ko, 2006). Developing the
procedure is meanwhile, not only a cost-related issue; it is also something that the
customers place great value on. Customers who have the option of buying a product online
but returning it in the physical store of the retailer, appreciates the convenience of the
service and are more prone to trust the online channel and may feel more comfortable
making the purchase (Wallace et al., 2008; Görsch, 2000).

2.4.5. Consistency

One issue that has been experienced related to channel integration is that the
level of consistency is not high enough. This is many times not an easy task to deal with due
to the discussed differences between the channels. Areas in which the retailer has to decide
the level of uniformity is among others pricing and promotions, delivery and return policies
and assortment (Zhang et al., 2010). Charging different prices in the different channels goes
against the strong argument regarding providing the customers with a seamless experience,
and many authors agree that it is crucial that the customers do not experience disturbing
inconsistencies between the different channels, as previously mentioned by e.g. Oh et al.
(2012). However, it is possible that retailers can use special promotions as a tool to direct
customers into a specific channel (Zhang et al. 2010).
Piercy (2012) argues that retailers must be aware that adding additional
channels can negatively influence the existing ones if the service level of the new channel
does not live up to the expectations of the already existing one. However not only negative
experiences carry over the channels. Also a positive experience in one channel tends to
carry over into the other channels and leave the customer with a positive view of the
retailer as a whole. This can for example be regarding trust in the website that carries over
into trust in the mobile apps (Lin, 2012). It is therefore of great importance to build up and
maintain a good level of communication and to make sure that integrative strategies are in
place in order to achieve well-coordinated channels (Webb, 2002).

2.5. Working conceptual model

18
 Below is an overview of the motivators and challenges found in the
literature that the retailers could face when implementing an omni-channel strategy of total
channel integration. The concept of omni-channel retailing is at the center of the model.
The motivators symbolize the incentives for an individual retailer to offer its customers an
omni-channel shopping experience. The stated challenges aim to illustrate which obstacles a
retailer should expect to encounter when implementing an omni-channel strategy. This
model will form the basis of the analysis and will be revised according to the empirical
findings in the end of the fifth chapter.

FIGURE 1: Working conceptual model of omni-channel retailing (Source: Authors’ own,

2015)
N.B. The dashed arrows and lines do not illustrate a cause-and-effect relationship. The
arrows rather show how the motivating factors lead the retailer to implement an omni-
channel strategy whereas the lines solely represent a connection between the challenges
and omni-channel retailing.

19
 3. FOOD INDUSTRY IN INDIA
3.1. History
The Indian agriculture sector has come a long way since the time of independence.
With the emergence of green revolution, India agricultural Industries have transformed
itself from a country of shortages to a land of surpluses. With the rapid growth of the Indian
economy, a shift is also being seen in the consumption pattern of the country, from cereals
to more varied and nutritious diet of fruit and vegetables, milk, fish, meat and poultry
products. All these efforts have resulted in the development of a sunrise industry namely
the Food Processing Industries.
India is the nation of over 1.10 billion consumers, there is a large untapped
domestic market of 1,000 million consumers in the food processing sector and 200 million
more consumers are expected to shift to processed food by the end of the year 2010. India
is analysed as the second largest producer of fruits and vegetables in the world. Although
there is a huge wastage of perishable food items in the country due to lack of proper food
processing facilities and the level of processing is only about 2.2 %. However, Indian Food
processing Industry has got tremendous potential to unleash large scale process based on
farm activities to exploit the emerging global business opportunities.
In July 1988, The Ministry of Food Processing Industries (MFPI) was set up to give
an impetus to development of food processing sector in India. The Ministry formulates and
implements the policies & plans for the food processing industries according to the overall
national priorities and objectives. It acts as a catalyst for bringing in greater investment into
the sector while guiding and helping the industry and even creating a conducive
environment for healthy growth of the food processing industry.
Indian Food Processing Industry covers fruit and vegetables; meat and poultry; milk
and milk products, alcoholic beverages, fisheries, plantation, grain processing, consumer
products groups like confectionery, chocolates and cocoa products, Soya based products,
mineral water, high protein foods, etc. The most promising sub-sectors consists of Soft-drink
bottling, Confectionery manufacture, Fishing, aquaculture, Grain-milling and grain-based
products, Meat and poultry processing, Tomato paste, Fast-food, Ready-to-eat breakfast
cereals, Food additives, flavours etc.

3.2. Evolution
There is no doubt that the food consumption habits of Indians are changing.
Indians are going to eat out more often or they are ordering the take away food as their
disposable incomes increase and due to the change in the lifestyle. An increase in the
working population, urbanization and consumerism are some other factors for growth in the
food service industry. The revolution in the restaurant industry began in the nineties when
McDonald’s, Pizza Hut, Domino’s Pizza, Subway and Yo! China entered the country and since
then there has been no looking back. The industry is continuing to evolve according to the
needs of the consumers which is again leading to its growth.

20
 Consumers in India are once again changing their preferences and have begun to
experiment with various world cuisines and this is a growing trend in all metros. The food
service industry has taken note of these changing trends have begun to cater to these
demands by serving a variety of foods from across the world like Italian, Mexican, Japanese,
Middle Eastern and European, African besides the popular Chinese and Thai and American
fast foods. All these trends have led to the massive growth in the restaurant industry which
now has a market size of Rs 247,680 crore and the predicted growth by 2018 is expected to
reach Rs 408,040 crore.
Another noticeable trend today is that consumers have begun to use technology
in a big way to research restaurants online before making a decision about where they
would like to eat. They consult sites like Zomato, TripAdvisor, Justdial, Food Panda, and
Groupon to see eating out options and many base their decision on the reviews that other
customers have given about restaurants on social media or in comments on these sites. As
lifestyles improve customers expect not only a good location and ambience but factor in the
health quotient and the calorie intake also as deciders in food
The largest segments of customers who eat out are the 21 to 30 year olds and this
group makes up 40% of the customer profile followed by 31 to 40 year olds. These are
obviously professionals and 30 % of their monthly consumption expenditure goes into foods
and beverages. A good 73% of customers consider price to be the biggest decider when
eating out. These consumers eat out when there are offers, discounts or loyalty
memberships and are different from customers who’s eating out is need based rather than
an eating out experience.
The market segment of the food service industry that is right on top are the
Quick Service Restaurants with 43% market share followed by and casual dine-in at 31%
while cafe chains. Frozen desserts and ice-creams form 6% of the share followed by fine
dining at 4% and the rest of the market is shared by pubs, bars, clubs and lounges. QSR and
casual dine -in are popular with the working professionals while fine dining is family and
occasion oriented.

3.3. Challenges
Food processing industry is recognised as the ‘sunrise industry', providing vital
linkages between the two major sectors, manufacturing and agriculture. The Food
Processing industry in India is undergoing a significant transformation. With a turnover of
$110 billion, it accounts for 35 per cent of the Indian food market
Though low levels of processing and market share in the global arena suggest an
untapped opportunity to capitalise on India's enormous raw material base and propel
exports, they also indicate critical challenges to be trounced to sustain continual growth of
the industry.
Supply side bottlenecks: Small and dispersed marketable surplus due to fragmented
holdings, low farm productivity, high seasonality, perishability and intermediation result in
lack of distribution on supply and quality, and in turn, impede processing and exports.

21
Infrastructure bottlenecks: More than 30 per cent of the produce from farm gate is lost due
to inadequate cold chain infrastructure (covering only 1 per cent of total F&Vs production)
and inadequate logistics. About 80 per cent of the 217 lakh tonnes cold storage capacity is
engaged by potatoes while other F&Vs account for only 0.2 per cent.
Likewise, instead of using specialised transportation for perishables like reefer vans,
their logistics predominantly rely on traditional modes, commonly used for grains. Yet,
development of cold chains and logistics infrastructure remains an unviable investment
option, on account of, lack of critical scale and high operating costs (twice than in the West).
The food processing industry has a high concentration of unorganised segments,
representing almost 75 per cent across all product categories. Thus, explaining the
inefficiencies in the existing production system, ascribed to the debility of small regional
players to invest in technology up gradation and diversify into alternate product categories.
Deficiencies in the regulatory environment: Lack of integration & clarity: Numerous laws,
under the jurisdiction of different ministries and departments, govern food safety and
packaging. The multiplicity of legislation leads to contradictions in specifications, conflicting
approach, lack of co-ordination and administrative delays. For instance, manufacturers of
packaged food products such as jams and squashes are obligated to comply with quality
standards and label declarations prescribed under multiple legislation such as The Standards
of Weights & Measures (Packaged Commodities) Rules, Prevention of Food Adulteration
(PFA) and Fruit Products Order (FPO). Correspondingly, FPO allows usage of Class II
sweeteners in Fruit Products, whereas PFA does not.
LACK OF HOLISTIC APPROACH: Despite conferring numerous incentives for establishing new
processing units, proportionate results have not been achieved. This can be credited to the
absence of vital peripheral infrastructural linkages and legislation for contract and corporate
farming, inadequate implementation of the APMC Act and cumbersome procedures to avail
grants. Also, unlike for small scale industries, fewer schemes have been designed to
promote scale by incentivising large scale investors.
Besides these, inherent anomalies such as mounting cost of finance, lack of skilled
and trained manpower, inadequate quality control and packaging units and high taxes and
duties, thwart development of FPI.

3.4. Opportunities
 Indian consumers are rapidly changing their eating habits. Trends indicate a sharp
increase in on-the-go eating, snacking in between meals, switching to healthier eating
alternatives, pre-cooked ready to eat meals and increasing consumption of organic
foods. This has led to a host of new opportunities in the consumer foods market for both
domestic and international companies to build a stake in this fast-growing processed
food market.
 While there are several companies entering the market, the sector is largely untapped
given the low per capita consumption levels and the dramatic changes occurring in the
Indian lifestyle.

22
 India is also being developed and nurtured to become a global outsourcing hub for food
processing because of its strategic location which connects to various export market
destinations. There has been a steady improvement in the infrastructure available to
establish Agri Export Zones (AEZ) in the country.
 In the last few years the MFPI has funded the development of various Mega Food Park
projects. The ‘Make in India’ campaign has established more than 40 Mega Food Parks
(MFP) and also provided fundamental infrastructure to operationalize new companies
rapidly. The estimated investment by the government in this initiative for FPS so far has
been more than USD 2 billion.
 This is being overcome by way of government intervention in aiding the development of
infrastructure in cold chain, streamlining supply chain and logistics.
 It is expected that technology up gradation from various stakeholders will help facilitate
optimized procurement and storage of perishable raw materials, timely transformation
into finished goods and efficient distribution across different levels in the network. It is
imperative that the percentage of the wastage in the supply chain be reduced to realize
the true potential of the FPS.
3.5. Changing scenario of food industry in India
The Indian food processing industry stands at $135 billion and is estimated to
grow with a CAGR of 10 per cent to reach $200 billion by 2015. The food processing industry
contributed 7% to India‘s GDP. The industry employs around 13 million workers directly and
about 35 million indirectly.
The industry is segmented into sectors namely, milk and allied products (dairy),
meat and poultry, seafood, bakery and confectionery, fruit and vegetables, grain, pulses and
oilseeds (staple) products, alcoholic and non-alcoholic products (beverages), and packaged
foods. The classification is not distinct as many processed products overlap different
segments.
India ranks No. 1 in the world in production of Milk (Fresh, whole, buffalo),
Pulses, Ginger, Chick Peas, Bananas Guavas, Papayas and Mangoes. Further, India ranks No.
2 in the world in production of Rice, Wheat, Potatoes, Garlic, Cashew Nuts, Groundnuts, Dry
Onion, Green Peas, Pumpkins, Gourds, and cauliflowers. With the huge production base
India can easily become the leading food supplier to the world and at the same time serving
its vast growing domestic market with over a billion people.
Investments in the registered food processing units have been growing in the
recent years. In 2007-08 the fixed capital of registered food processing units have increased
by 18.93% over the previous year.
Food processing industry in India is increasingly seen as a potential source for
driving rural economy as it brings synergy between industry and agriculture. A developed
food processing industry is expected to lead increase in farm gate prices translating into
increased rural incomes, reduce wastages, ensure value addition, promote crop
diversification, generate employment opportunities as well as export earnings. With such a
large and diversified production base coupled with low manpower cost and modern

23
technology, the Indian food processing sector is poised for growth, if the advantages are
leveraged optimally.
The growth is driven by the fact that the central government has given a priority
status to all agro-processing businesses. Government incentives in the field of mega food
parks, cold chain and exports benefits are also playing an important role in promoting food
processing.
The major challenges are investments at different points of the supply and value
chain, proper research, farm and lab connectivity, upgradation of technology, increase in
farm holding, skill and manpower training, backend and front-end integration and cold chain
integration.
The opportunities in the food processing industry are vast. However, there is a
need to improve technology and productivity to be competitive globally. As the economy
grows, the food processing industry will offer bigger opportunities to the new as well as the
existing players.
India has the second largest arable land of 161 million hectares and has the
highest acreage under irrigation. Next to China, India ranks second largest food producer in
the world and has the potential to immerge the biggest with its food and agricultural sector.
India accounts for less than 1.5% of international food trade despite being one of the
world‘s major food producers, which indicates huge potential for both investors and
exporters.

24
 4. ONLINE FOOD DELIVERY
4.1. Introduction
Online food ordering is the process of food delivery or takeout from a local
restaurant or food cooperative through a web page or app. Much like ordering consumer
goods online, many of these services allow customers to keep accounts with them in order
to make frequent ordering convenient. A customer will search for a favourite restaurant,
usually filtered via type of cuisine and choose from available items, and choose delivery or
pick-up. Payment can be amongst others either by credit card, PayPal or cash, with the
restaurant returning a percentage to the online food company.
In May 2015, Eric Kim, a contributing writer for TechCrunch and CEO of Rushorder,
reported that "of the $70 billion [takeout and delivery market], only about $9 billion
(roughly 13 percent) is online. However, in China, online food delivery services are the one
of the fastest and most frequently used services, especially in tier 1 and 2 cities, growing
23% in 2017.

4.2. History
The first online food order was a pizza from Pizza Hut in 1994.

The first online food ordering service, World Wide Waiter (now known as Waiter.com), was
founded in 1995.The site originally serviced only northern California, later expanding to
several additional cities in the United States.
During the dotcom boom, start-ups like Webvan, HomeGrocer, and Kozmo started
online grocery delivery, but ended up closing in 2001 after the dotcom crash. Seamless was
also founded during this time.
Grub Hub was founded in 2004. By the late 2000s, major pizza chains had created
their own mobile applications and started doing 20-30% of their business online.
With increased smartphone penetration, and the growth of both Uber and the sharing
economy, food delivery start-ups started to receive more attention. Instacart was founded
in 2012. In 2013, Seamless and Grub hub merged. By 2015, online ordering began
overtaking phone ordering.
As of September 2016, online delivery accounted for about 3 percent of the 61
billion U.S. restaurant transactions.

25
4.3. SWOT analysis of online food delivery

Strengths
 Strong management – Strong founder base from both a former investment banker and a
software director has led to traditional star-up hurdles being avoided. Will Shu the
software director co-founder has successfully coordinated with a giant technology fund
to negotiate a $275m investment into the company (Klienman, 2017).
 Pricing power – Deliveroo uses its competitive power and exclusive takeaway
partnerships to undercut the competition to ensure customers can order at the cheapest
price (Mintel, 2016)
 Cost advantages – By controlling their own apps and operating workers as 'gig-based'
they avoid traditional taxes and employments charges (Pooley, 2017)
 Supply chain – Through exclusive partnerships and newly launched standalone kitchens,
Deliveroo doesn't make any of its products, it contracts kitchens to make the food and
self-employed workers to deliver it. The strength is the vested interest each part of the
chain has with each other to help each other to succeed. This means the kitchens,
delivery drivers and Deliveroo employees each support the weight of Deliveroo equally
(Mintel, 2016).
Weaknesses
 Branding issues – In 2016 Deliveroo rebranded the entire company in an effort to stand
out from the emerging competition of Just Eat, UberEATS, and Amazon Restaurants.
However, the critical issue for the company is the price factor where customers primarily
chose an app-service based on cheapest delivery price and have very low brand loyalty
(Mintel, 2016). The rebranding is aimed to signalling a new step for the company and an
effort to gain legitimacy in the currently controversial online-food ordering platform
market (Banks. 2016).
 PR issues – Complaints have been made regarding the company's failure to provide cycle
training and safety equipment. Furthermore, criticism towards the company's treatment
of employee's rights have led the company to gain numerous negative headlines and
bad press.
 Technical malfunctions – Deliveroo's sole reliance on the app service has led to several
crashes over the years with the latest in 2017 resulting in hundreds of customers losing
their orders and money. While eventually resolved, Deliveroo faced heavy criticism for
their lack of clear communications and poor customer support (Blake, 2017).
Opportunities
 New Technology – To capitalise on the food delivery market growing by 650% in 2016,
Deliveroo are investing in a new 300 persons 'tech-hub' in London. The purpose of this
hub is to investigate and experiment with new systems to enable the company to
manage more orders and deliveries. The first product of this new hub is a partnership
with the TripAdvisor app which will soon allow for customers to order directly through
their app as well, increasing brand awareness for both companies (Goodfellow, 2017).

26
 New food trends – With an increased awareness of healthy takeaway options and a
growth within the sector, customers are now viewing services like Deliveroo as a regular
convenient healthy alternative to cooking (Mintel, 2016).
 New partnerships – To expand out from the highly competitive food market, in 2016
Deliveroo became the first mainstream app delivery service to offer alcohol deliveries.
Partnering with Heineken in a move that marks the first time an alcohol brand has
offered a direct-to-consumer retail route. Deliveroo are aiming to place the app service
at the forefront of all delivery needs beyond solely meal delivery. This expansion allows
for Deliveroo to gain a unique competitive advantage over other brands (Vizard, 2016).
Threats
 Bad Economy – The uncertainty of Brexit and the fall in the value of the pound has led to
a decrease in takeaway orders in the UK, with many customers seeing the service as a
luxury (Buttonwood, 2016).
 Intense Competition – Since the launch of Deliveroo competition has grown to include
companies like Just Eat, GrubHub, UberEATS and HungryHouse. Furthermore, in 2016
Amazon have launched their new delivery service with the advantage of 'free one-hour
deliveries' to undercut the competition (Mintel, 2016).
 Changes in food tastes – Primarily Deliveroo partner with traditional takeaway services,
however with food trends moving towards healthier options, the company must be
ready to adapt to changing tastes and partner with food brands that offer what
customers require (Mintel, 2016).
4.4. Business of partner restaurants
Restaurant megachains already have a lot on their plate: The industry is too
crowded and their menus and supply chains need an overhaul as consumers opt for trendy
or healthy ingredients. But they must be careful that dealing with those ongoing challenges
doesn’t cause them to miss out on their best hope for long-term growth.
Over the next five to 10 years, nothing will be more decisive than online food
delivery in sorting winners and losers in the dining sector. In fact, restaurant chains are at
much the same moment that mall-based and big-box chains were in the first decade of the
2000s, when e-commerce had just started to show itself as a massive threat to the
traditional retail model.

Just 1.6 percent of all restaurant industry transactions in 2017 were conducted
online for delivery, according to a report by Cowen Inc. restaurant industry analyst Andrew
Charles. The same analysis estimates that online delivery accounted for $19.7 billion in gross
merchandise volume, or 3.7 percent, of US restaurant sales in 2017. That’s roughly in line
with the proportion of retail sales that had moved online by 2008. And we all know how
different the mall landscape is now compared to 10 years ago.
Online food delivery is likely to similarly transform the restaurant business,
as GrubHub Inc., Uber Eats, Postmates and others make it easy to place orders and

27
effectively train consumers to think differently about the occasions for which delivery is a
logical option.
Chains such as McDonald’s Corp., which offers delivery from more than 11,500 of
its restaurants thanks to a partnership with Uber Eats, are finding that the average order
value is actually larger for delivery orders and that the offering is attracting incremental
business, such as during late-night hours. That should offset some of the profitability
concerns.
Restaurants need to move quickly, because it’s hard to overstate just how many
changes this format necessitates. For instance, they have to rethink how they use space in
their kitchens and dining rooms. Consider Chipotle Mexican Grill Inc., which got 8.8 percent
of its sales from digital transactions — including mobile orders for pickup — in the latest
quarter. So the burrito chain has been outfitting its kitchens with second “make lines” to
handle additional demand from online.
Sit-down chains also need to think about ways to make their food travel well.
IHOP, for example, has introduced patented to-go packaging designed to suit the shape and
texture of pancakes.
Restaurants need to move quickly, because it’s hard to overstate just how many
changes this format necessitates. For instance, they have to rethink how they use space in
their kitchens and dining rooms. Consider Chipotle Mexican Grill Inc., which got 8.8 percent
of its sales from digital transactions — including mobile orders for pickup — in the latest
quarter. So the burrito chain has been outfitting its kitchens with second “make lines” to
handle additional demand from online.
Sit-down chains also need to think about ways to make their food travel well.
IHOP, for example, has introduced patented to-go packaging designed to suit the shape and
texture of pancakes.
And restaurants may even find themselves wanting to change their menus. Uber
Eats has been using its data to help local restaurants launch delivery-only menus. In Chicago,
it found people were searching for suddenly popular Hawaiian poke, but there weren’t
many options. So Uber Eats reached out to neighbourhood sushi spots, which would already
have some of the same ingredients, and asked them to try making the dish for the app.
Imagine how transformative those kinds of insights could be if applied at the scale of a chain
restaurant.
There are, of course, risks in embracing digital-powered delivery. It’s possible some
third-party providers flame out, leaving them in the lurch. There could also be consolidation
in this arena, which would make for a less competitive landscape and leave restaurants
paying frustratingly high commissions.
And while outsourcing delivery means restaurants don’t have to develop a new
competency, it also means they are relinquishing control over how consumers engage with
their brand. When diners buy Popeyes fried chicken through Uber Eats, they won’t be

28
interacting with customer service workers that Popeyes trained. They’ll be interacting with
some contractor driver. Still, these risks shouldn’t obscure the bigger picture.

4.5. Challenges
IN BUSINESS POINT OF VIEW
When it comes to Online Food Delivery Services, food industry is seeing an
exponential growth in numbers of food start-ups. India seems to have a growing appetite
for these start-ups.
Due to many factors, a drift towards online food delivery services is seen in India.
Lately, many food delivery businesses have mushroomed in India, mostly catering to busy
urban Indians.
Many food delivery services have become household names in India, especially
among working professionals. Innovative minds are experimenting with various food
delivery models, bringing innovation in the sector – production, distribution and supply
chain. There’s no surprise that the investors are being attracted and tempted by the sector.
There are ventures which have already established themselves in the industry and
have gained attention of both investors and consumers. Also, there are ventures which are
yet to grab the limelight.
Interestingly, businesses from various other niches are experimenting in this
lucrative sector. Justdial and Cab aggregator OLA has already made their way into online
food delivery services segment.
Though the Online Food Delivery market offers immense commercial potential, it
also presents certain major challenges:
 Chef’s Onboard: Hiring good chefs is one of the initial and biggest challenges. You need
to test various chefs; you need to check their cooking styles, how hygienic they are and
many other things. Also, retaining them is a big task.
 Retaining Customers: People get bored easily, even if the food is good. With so much
competition and new start-ups in the segment emerging daily, it is hard to retain
customers.
 Food Standardization; Food Standardization is another daunting challenge of Online
Food Delivery business. When dealing with food, you need to take as much care as
possible of food standardization.
 Pricing: Since Food Delivery segment has become quite competitive, setting up pricing is
another major challenge.
 Earning Higher Profits: Again, due to competition, it is a challenge to earn higher profits
in the segment.
 Managing Logistics: Managing logistics is most difficult hurdle of Online Food Delivery
ventures, especially since food stuffs are highly sensitive products. Other than integrity
and freshness of the food items throughout the supply chain, it is also important that
vendors eliminate any concerns that customers may have.

29
 Freshness of Food: Food tastes best when it is best and hence, keeping food fresh during
delivery cycle is most important challenge of food delivery. Food needs to be in
particular time slots so as to retain its freshness.
IN CONSUMER POINT OF VIEW
 Online Payment and subsequent delay in refund- Suppose you are ordering from
Dominos, and you decide to pay online (net-banking or credit/debit card) just to save
you from the hassle of exchanging cash. Now delivery guy is late (post the promised 30
minute time slot), you ask the delivery guy for refund. He calls up his manager, and
agrees for refund. But since, you paid online, your refund gets processed in a week.
Sometimes, the Dominos people deliberately don’t initiate refund and you have to keep
nagging them so as to do it.
 Scam by food ordering apps such as FoodPanda - So you decide to order food through
Foodpanda or any other equivalent, there is a huge list of restaurants to choose from.
There is this favourite restaurant of yours XYZ, which you place an order from. Soon
after placing the order you realise that the place had shut down a month ago. Then, how
come it was still live on Foodpanda? The order had gone through. Foodpanda had
accepted it. You wonder and keep thinking, after about 10 minutes, you receive a call
from the Foodpanda call centre. The guy at the other end was apologetic: “I am sorry,
sir, but your order cannot be processed because of a technical issue.” You sit there
confused, wondering what to do next. Then he comes up with the saviour remedy- “We
are extremely sorry. You can place an order from any other restaurant. Your order was
worth Rs.300 and we are offering you a free voucher of Rs.300.” As hungry and
bewildered as you are, you have no choice but to comply. There are two ways of looking
at the incident. One, the folks at Foodpanda had no clue that the restaurant had shut
down, which is why the order went through. Two, the folks at Foodpanda knew that the
restaurant had shut down, but didn’t care because the restaurant was popular and they
didn’t want to lose customers. Because that’s all they cared about—transactions.
Neither explanation makes Foodpanda look very smart.
 Post demonetization hassle in cash on delivery - You have ordered food online and
selected the CoD option. Your bill amounts to 350/- and you come to the delivery boy
with a 2000/- note. Both of you stare at each other helplessly, having no clue what to do
next. Then you sit behind on his bike and roam around to nearby shops just to gather
the perfect change. Trust me, it is not cool.
 Selection - I used Zomato, local start-ups like Dabbameal and other tiffin services
providing good food but it almost took on an average an hour to decide what to eat
when I had so many options
 Price - As for spending for a single person, the food usually costs more. I could get a
tiffin/dabba at 100rs but the same can’t be said for Zomato and other providers for
many calculations needed to be done including discounts, free delivery minimum order
and so on and so forth.
 Packaging- I ordered takeaway food everyday in the evening and on an average in a
week, I would face bad packaging and cold food issues at least 2 out of 7 times.

30
 Timings and Tracking - Some provide you with tracking the delivery person with the help
of SaaS based logistics companies like Runnr. But most of them don’t so talking back and
forth to enquire where the food has reached with the restaurant is a headache
 Food Quality - Now again out of 7 days in a week, there would be at least 1 day when
the food would not be up to mark. So unlike me if a person is ordering very less number
of times and happens to order on that particular bad day, it has a negative impact and
affects her/his future orders from any place.
These are some of the points. I would emphasise for different age/working group
of users, one needs to provide food based on their budget because in India everything
eventually boils down to pricing in the larger market. Add some discounts and the person
feels he saved; rather he earned from the restaurant (which gives a sense of satisfaction but
already he is overpaying for the food, who cares everyone is happy in the end).

4.6. Development trends

India’s online food ordering sector saw a strong growth rate in the number of daily
orders, growing consistently at 15 per cent on a quarterly basis from January to September
last year, according to a report from RedSeer Consulting.
The growth has resulted in the number of orders on a daily basis clocking an
average of 400,000 during the September quarter. It has also meant players, including
Swiggy, Zomato and Foodpanda, are investing in in-sourcing deliveries.
In the September quarter, self-deliveries grew to 56 per cent of the total number
of orders done by the food-tech sector in India. In-house deliveries stood at 46 per cent in
the fourth quarter of 2016.
“It is becoming increasingly clear that food tech is more and more of a logistics
play, restaurant discovery is not a deep competitive advantage. There are clear trends on
customer and seller satisfaction supported by the better delivery speed and compliance that
vouch for superiority of the captive delivery model in Indian market,” said Anil Kumar,
founder and chief executive officer, RedSeer.
Having a better control of their deliver fleets, food ordering platforms were able
to bring down the average time taken to deliver a meal from 47 minutes in the December
quarter of 2016 to 42 minutes in the September quarter in 2017. This number is expected to
grow as food tech players look to boost customer satisfaction and have them order more
meals.
Swiggy, one of the leading players, has in-sourced deliveries since its inception
and continues to process 100 per cent of deliveries.
Zomato, which started off as a restaurant discovery platform and turned to
online food ordering, acquired Runner, a hyper local logistics firm in order to boost its own
in-house delivery arm.
The growth in 2018 is expected to continue at the same pace. However, Ola,
India's largest taxi-hailing firm, buying Foodpanda could upset the market. Ola has said it

31
would invest $200 million into Foodpanda over the next few years, creating a scare that
there could be a price war in the food-tech space again.
Currently, players such as Swiggy and Zomato have managed to maintain the
growth despite charging delivery fees for small-ticket deliveries. Experts
and industry watchers say the model of delivering food from restaurants, which is ordered
online has been proven, even if there’s some way to go for firms in the space to begin
making profits.
This also puts the sector at risk from being invaded by players with deep
pockets, who splurge huge amounts of money to grab market share and fend off rivals in
the hope that they'll be able to turn profitable someday.
Snapshot
 Online food-ordering sector grew at 15% q-o-q from Jan-Sep 2017
 Average daily orders grew to 400,000 in the three months to Sep 2017
 In-house deliveries accounted for 56% of all orders in the Sep quarter
 Delivery times dropped to 42 minutes in Q3 FY17 v/s 47 minutes in Q4 FY16.

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 5. ONLINE FOOD DELIVERY APPS
5.1. Proposed system
To overcome the restrictions of above system, based on Internet of Things an
Online Food Ordering System is proposed. The use of mobile technology has revolutionized
as the Android devices have gained popularity in the automation of routine task in wireless
environment. For mobile devices such as smart-phones and tablets android is a Linux built
operating system. As a general Objective of the study to develop a reliable, convenient and
accurate Food Ordering System is considered. As an objective, a system that will surely
satisfy the customer service will be considered. To design a system that can accommodate
huge amount of orders at a time and automatically compute the bill is one of the key
objectives. One of the important objective is to evaluate its performance and acceptability
in terms of security, user-friendliness, accuracy and reliability. One of key objective is to
improve the communication between the client and customers.

Figure-1: System architecture

5.2. Architectural design

The system implementation contains 3 main users: - Service Customer, Proprietor of
Mess/Restaurant, and Worker of mess. When a person moved to new city he must find source for
clean and superior food, so he/she will explore and select restaurant or mess, or tiffin service based
on his category. The pattern in which user will search the services for a purpose GPS system should
be on and a part of Geo- Hashing Algorithm is used. Person can have the facility to search service by
location that is home location of the person is detected with GPS and nearby service get searched
according to selected option location. Searching by cost is another way. Search by rating is also
possible by our system. List of service is given if matched by the user given ratings when the services
that has ratings are checked with it. The search can be carried out by accepting distance from user
where it needs to search and displaying service provider within a distance.

5.2.1 REQUIREMENTS DEFINITIONS

33
 Analyses based on similar application and determines the necessary features in the
application, as well as do the details about the features that will be created with function of
each features. Features that are needed in application for customer are as follows:
 New Order: New Order is the main feature of the customer side application that will be
used to make orders. An order can be made in two separate ways, the one is by is using
My Favourites feature to make an order by choosing one of the top three favourites
restaurant and the other one is by using Make a new order feature to make an order by
choosing restaurant and menus provided easily.
 Order History: Customer’s order history is shown by this feature namely order history.
 Restaurant Profile: Restaurant’s profile is shown by this feature. Through this feature
customer can make call to the restaurant directly.
 Order Status: This feature is used to show that order status that includes “order
received” means that restaurant has received the order, “order confirmed” means that
restaurant has confirmed the order, “cooking” means restaurant is preparing the order,
“delivering order” means that delivery of the order is done. While the status is on
“delivering order” the customer can also show the delivery map.
 Profile Setting: To show and to change customer profile this feature is used that
comprise of name, address, email, and phone number.
Features required in website for admin are:
 Resto: Restaurant list is shown by this feature. Admin can modify restaurant data and
insert new restaurant including transformation from restaurant active or inactive status
through this feature.
 Order: Order list which has been done by each restaurant is shown by this feature.
 Menu: Menu list of each restaurant is shown by this feature. Through this feature admin
can also alter each menu.
 Courier: Courier list of each restaurant is shown by this feature. Through this feature
admin can also amend each courier data.
 Customer: Customer list in this application is shown by this feature. Through this feature
admin can also modify customer profile.
5.2.2. SYSTEM AND SOFTWARE DESIGN

Using the storyboard design, we construct the application design workflow for
restaurant, customer, courier and admin side; the user experience design. The use case,
class diagram, sequence diagram, activity diagram and database structure design are
comprised in the Unified Modelling Language.

 Storyboard design: Designing the user interface is done by storyboard design which
includes each interface description.
 User experience design: When interacting with the application, designing the totality of
end user perception this design is used.
 UML design: The UML design contains use case to define the system function from each
actor perspective then accomplished by explanation in use case narrative, to draw the
process of each actor in diagram activity diagram is used, to draw object or class of

34
 system with its relationship class diagram is used and to draw the message interaction
with its objects base on its order of time sequence diagram is used.
 Database structure design: By the result of class diagram, database structure design is
made. Classes that need to be saved in database and its relationship are drawn by this
design.
5.2.3. System implementation

The implementation of the system application is done in Java, jQuery, HTML and
the datasets are stored in MySQL database. We have developed hybrid Android Application
using Cordova.
We have developed a web-based application and based on it we have developed
the android application.
The hardware required for our application includes Android Smart phone and a
desktop or laptop with browser and internet connection.
For the initial implementation of the system we have considered 2
restaurants/mess from 5 areas nearby in our datasets.
Implementation of our system consists of a real time feedback system where
once you place an order, an email will be sent to the customer regarding the feedback of
their order.
According to the comments and ratings of the customer, using Sentiwordnet
analysis we provide recommendation to the customers providing the highly rated
restaurant/mess first and other respectively. The Sentiwordnet analysis uses the comments
mentioned in the feedback and assign a value that can be positive and negative and
organize the restaurant/ mess in a fashion. This means the restaurant / mess with the
highest positive value will be shown first and vice versa.

5.3. Results
The result of our system application includes an Android Application as well as a
Web-based application. Once a customer place an order for a restaurant / mess, he/she will
get the order Id on the screen dynamically.
The customer can check the status of the order through the Order Status interface
provided in the GUI of the application. We have developed the system application in such a
way that the customer can order the food first and then enter the required credentials while
checkout.
Once the order is delivered to the customer, a feedback mail is send to the
customer regarding his experience with the entire application. The feedback mail consists of
the star rating as well as comments of the customer.
The customer can track his order through the Tracking Interface provided in the
GUI of the application. The restaurant / mess owner as well as customer can track the order
in our system application. The preview of this tracking system is shown below.
35
Figure-2: Customer tracking

36
 6. CUSTOMER PREFERENCE OF ONLINE
FOOD DELIVERY
6.1. Why people eat out?
According to Lungberg and Walker (1993) said that the reasons for "eating out" are
several and some of them complex. The National Restaurant Association (NRA) has
sponsored a number of studies of restaurant consumers and their reactions to various kinds
of restaurants. According to one of these studies, the three most important considerations
in the decision to eat out were:
 No one has to clean up
 It permits a change of pace
 It is considered a treat
When selecting a new restaurant, the person depends a great deal upon
recommendations of friends. This is nearly equal in importance to the type of food the
restaurant serves. Appearance and location are a distant third and fourth in consideration.
Quality of food is the most important factor in people's evaluation of any of
restaurant. The second most important factor varies by restaurant type. In fast-food, coffee
shops, and take-out restaurants, it is speed of service; in family-type restaurants,
cleanliness; in cafeteria, it is the selection of food; and in atmosphere/specialty restaurants,
it is the atmosphere or d6cor.
According to National Restaurant Association statistics, the most common day of
the year to dine out is a birthday. Approximately 50% of consumers celebrate their birthday
at a restaurant. Mother's Day and Father's Day rank as the second and third busiest holidays
celebrated in restaurants. The most popular day of the week for consumers to dine out is
Friday, followed by Saturday and Thursday (Mill, 1998).

6.2. Customer satisfaction

According to The City Pages, Minneapolis/ St. Paul reviewed about one Vietnamese
restaurant in town by Moskowitz (1999) said “Customers are stocking up in pursuit of fresh,
simple Vietnamese food made with an emphasis on clean flavour and bright herbs,
delivered quickly, and priced reasonably".

6.2.1. Meeting customer expectations

Increasingly, customers have higher expectations, demanding more attention and

friendlier service. Most customers seem satisfied with food quality, dinning are cleanliness,
comfort of the atmosphere, freshness of the ingredients, and portion size. Indeed, the only
area where satisfaction is less than 50 percent relates to noise level. As the customer base
ages this is expected to become of even greater concern. Rising expectations manifest
themselves in a desire for a better price/ value relationship.

37
6.3. Perception
Perception is defined as a process through which individuals are exposed to
information, attend to the information, and comprehend the information (Mowen, 1995).
Understanding perception and the factors determining how consumers view products and
services is central to effective marketing (Berkman, Lindquist, and Sirgy, 1996). Schiffman
and Kanuk (1994) stated about consumer perception saying "as diverse individuals, we all
tend to see the world in our own special ways. "Reality" to an individual is merely that
individual's perception of what is "out there"- of what has taken place. Individuals act and
react on the basis of their perceptions, not on the basis of objective reality. Thus, to the
marketer, consumers' perceptions are much more important than their knowledge of
objective reality. For if one thinks about it, it's not what actually is so, but what consumers
think is so that affects their actions, their buying habits, their leisure habits, and so forth.
And because individuals make decisions and take actions based on what they perceive to be
reality, it is important that marketers understand the whole notion of perception and its
related concepts so they can more readily determine what factors influence consumer to
buy."

6.4. Motivation
Motivation can be described as the driving force within individuals that impels
them to action. This driving force is produced by a state of tension, which exists as the
result of an unfulfilled need. Individuals strive-both consciously and subconsciously-to
reduce this tension through behaviour that they anticipate will fulfil their needs and thus
relieve them of the stress they feel. The specific goals they select and the patterns of action
they undertake to achieve their goals are the results of individual thinking and learning
(Schiffman and Kanuk, 1994).
What motivate people to eat out According to Lundberg (1994) said people eat
out for a variety of reasons: to satisfy hunger, social needs, and ego and self-fulfilment
needs. The most popular theory of motivation, that proposed by A.H. Maslow, states that
humans are wanting animals. As soon as one need is satisfied, another appears to take its
place, motivating from the need for safety or security up the scale through social, ego, and
self-fulfilment. People go to restaurant to satisfy not only hunger but also self-esteem, self-
respect, self-confidence, and prestige needs.

6.5. The buying process

Various internal and external factors combine to influence how customers choose
where, when, how, and why to eat out. The vehicle used to explore this will be a national
study prepared by the National Restaurant Association on the dinner market.

6.5.1. Decision scenario

This report divides all dinner decisions into five basic decision scenarios:

38
 "Fun time." This relates to an upbeat mood and a sense of anticipation of fun; the
decision tends to be made well in advance.
 "Nice meal out." The desire is t enjoy the satisfaction or enjoyment of eating out, being
served, and getting good food, lots of it, at a reasonable price.
 "Craving." This refers to a desire for a particular type of food; seeing or smelling this
type of food can set off the carving.
 "Making sure that everyone is getting something to eat." This motivation comes from
the hectic pace of everyday life, attempting to balance a variety of work and family
schedules.

39
 7. FACTORS INFLUENCING CONSUMER
BEHAVIOUR
7.1. Introduction
Consumer behaviour has been always of great interest to marketers. The
knowledge of consumer behaviour helps the marketer to understand how consumers think,
feel and select from alternatives offered There are many determinants of buying behaviour
of a consumer like cultural , social, personal , psychological factors, etc. Although these
factors are uncontrollable but then also plays a prominent role in understanding
complicated buying behaviour of a customer.
All these factors work together at all the occasions to mould the behavioural
pattern of consumers. It is interesting to note that the factors, which are responsible for the
behaviour of consumers, are complimentary in character.

7.2. Factors affecting consumer behaviour

7.2.1. Cultural Factors

Consumer behaviour is deeply influenced by cultural factors which comprise of

three sub factors i.e. buyer culture, subculture and social sub classes. Culture gives birth to
traditions, values, norms and attitude of customers along with various other factors. Culture
is the part of every society and is the important cause of person wants and behaviour. When
we move from one country to another, the culture changes. Thus the marketers are
required to pay utmost attention while assessing the impact of culture on buying behaviour.
Each culture is a blend of various subcultures such as nationalities, geographic regions,

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religions, racial groups etc. A subculture is a group of individuals who have similar values
and behavioural pattern which is different from surrounding subcultural groups. Every
society possesses some form of social class which is important to the marketers because the
buying behaviour of people in a given social class is similar. Social class can be defined as a
division of society wherein the members have similar interest, value and show similar
buying behaviour.

7.2.2. Social Factors

The consumer’s social features of consumers is also recognized as a determinant,

which has a prominent impact on consumer behaviour. The important social factors are
reference groups, family, role and status. Reference Groups refers to a group of people
which influences an individual because an individual is a member of it or wishes to become
a member of it. An individual may belong to many reference groups at a time. The various
reference groups are family members, friends, neighbour’s co-workers, religious groups,
professional groups, Aspiration group, etc. Next, comes the family of a customer which is
taken as primary social factor or reference group influencing the buying behaviour to a
greater extent. In Indian society, two types of families have been prominently seen i.e.
Nuclear family and the joint family. The basic feature of nuclear family is its small family size
and high level of liberty with individuals take decisions whereas in joint families, the family
size is large and group decision-making gets more preference than individual. The Role
played by a customer and its status also has an effect on its buying behaviour. With the
change in role and status, the buying behaviour of customers also changes.

7.2.3. Personal Factors

Personal factor also referred to as demographic factors in many studies relating to

consumer behaviour. Personal factors include age, gender, education, occupation, income,
lifecycle stage, lifestyle, personality and self-concept'. Consumer’s aspects like thinking,
searching, and processing of information, decision- making and evaluation of products or
services varies because of influence of the personal factors. Age and life-cycle have
prominent influence on the consumer buying behaviour. The taste, preference and
behaviour changes with changes in the age and life cycle phase of a buyer. Income of a
buyer also act as predictor of its buying behaviour. Buyer with high income and high amount
of saving generally prefer to purchase high priced merchandise. With changes in sources of
earning or occupation, the buying behaviour of a prospects shift from one category of
product or brand to another. Lifestyle is another influencing factor which influences the
buying behaviour of a customer. The things or a product in an individual’s surroundings
gives indication about the lifestyle an individual is living. In order to understand the buyers
behaviour it is also important to know about the buyer’s personality. Personality signifies
“the inner psychological characteristics that reflect how a person reacts to his
environment”. The individual choices for various products and brands is representation of
individual’s personality.

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 8. LIFESTYLE CHANGES DUE TO ONLINE
FOOD DELIVERY
8.1. Benefits
The Online Food Delivery System is one of the fastest growing marketing strategy
for most of the Business people, in away to gain the more profits. As we all know that the
food is the basic need in every human life, for which he/she is struggling. But even after
their struggles, if people are still not happy with their sustenance, then the effort given
behind it is useless. The reasons might be the people are busy with their schedules, they
either can’t able to cook in right time or not having time to go and order their food from
outside.
Then here is the way, where Spicy and Delicious Restaurants and other food stuff
points have now started to deliver their food through the Apps as. Upon which, people can
stop starving and could start to eat healthier food, just by clicking on the menus served on
the apps. There are many more benefits offered by the Takeaway Food Delivery system,
below are some.
 Customer’s satisfaction: Since the customers need not to take risks of going outside,
stand in queues, one could order from Nearby Indian, Chinese, Thai Takeaway Delivery,
by sitting anywhere on the earth. This also tends the customers to fit their budget while
ordering, by reducing the travelling expenses and other unnecessary taxes.
 No bothersome works: The previous way of food ordering through phone calls included
many problems like, the staff of the Restaurant should speak to the different people
talking with different accents, sometimes there would be the background disturbances.
By all these activities, food ordering might go false. But now because of Order Online
Food for Delivery, all the above difficulties are solved.
 Easy trade for Restaurants: If the people have started a new Restaurant or the Hotel,
through their food point app, one can promote their Business leading to more
customers. Also, customers can Find Dining Restaurants Nearby.
 Services are 24/7: Customers will be happy for the services catered by the Restaurant
people at all time. Nowadays, Pizza, Sushi Delivery Online Orders are more, which are
expected to have fast transference.
 Effortless Maintenance: With the ready posts of Chinese, Indian, Thai Food Restaurant
Menu Online, there is no need to get printouts in case of updating the price, additional
Items and other cases. Also, customers can compare the price and services offered by
the different food points.
8.2. Effects
From ready-to-cook and ready-to-eat to ‘let us cook and you eat’ – the latest mode
of ordering food has taken the world by storm. The art of cooking was only getting easier
until we removed the human factor out of it completely. You get a ready-made platter of
creamy goodness, laced in greasy love and fatty convenience.

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 The world today is driven by technology. Everything you need is a touch away.
The dilemma of the reliance on technology continues to bother many. When it comes to
food, we are being spoon-fed by applications that help us tap and order.
This easy mode, however, has detrimental effects on health. As per a study
conducted in 2012 in a North Carolina restaurant serving pizza, ordering food through digital
media caused a 6% hike in calories against ordering at the diner. The vicious cycle continues
to loop us, and so caught are we in a web spun by these apps, that there is no way out. In
fact, 69% of diners receive their orders through mobile devices.

8.2.1. The effects on health

While food apps may claim to showcase some healthy food choices in their menu,
this culinary revolution has nurtured a sedentary, unhealthy lifestyle, thereby destroying the
choices of healthy eating and encouraging complex food ordering.
Convenience is the key factor influencing the trend. Whether you have had a tiring
day or just want to chill on your couch, all you have to do is tap and order to call for the
beautifully guised butter-laced piece of meat immersed in the quicksand of oil. It does turn
out rather expensive, now and in the future. Additional supportive apps like Apple Pay,
Samsung Pay, Easy Pay are trends that are fuelling the pattern of easy spending.
UK-based Deliveroo, famous for food ordering and delivery, seems to be
expanding exponentially, at about 25% per month. It was founded in 2013 and since then
spread to seventy odd countries. The food delivery market is worth 83 billion Euros, with
the estimated annual growth being 3.5%. There are many debatable points of this culinary
revolution. No doubt these apps provide a seamless experience, but they also aid unhealthy
eating habits.

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 9. METHODOLOGY
9.1. Aim
To study the increased popularity of deliverables like:- swiggy, Zomato, etc impacts
people’s lifestyle.

9.2. OBJECTIVES
9.2.1. To find out the reasons for increasing popularity of online shopping.

9.2.2. To find out the reasons for increasing popularity and key drivers of online food
delivery services.

9.2.3. To find out the consumer perception towards ordering food online.

9.2.4. To find the impact of online food delivery services on the lifestyle of the customer.

9.3. HYPOTHESIS
9.3.1. NULL HYPOTHESIS H0:

9.3.2. ALTERNATE HYPOTHESIS H1:

9.3.3. ALTERNATE HYPOTHESIS H2:

9.4. METHOD
Survey has been conducted by stratified random sampling method and it was
distributed to working professionals, housewives, students. The subject is well explained
before they filled the questionnaire.

9.5. SAMPLE

9.6. QUESTIONAIRE
It is totally self-designed. It contains 23 questions in which 21 questions which has
to be marked as “yes” or “no” and the other 2 questions which has been provided with
three options.

9.7. LIMITATIONS
The questionnaire is confined only to the people of Vishakhapatnam city.

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