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Market Research Report on An Exploratory and Descriptive Study of Online, Offline and both Consumer Banking

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An Exploratory and Descriptive Study of Online, Offline and both Consumer Banking

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Market Research Report on An Exploratory and Descriptive Study of Online, Offline and both Consumer Banking

  1. 1. 1 | P a g e Report On An Exploratory and Descriptive Study of Online, Offline and both Consumer Banking An Insight into Consumer Behavior Submitted To: Prof. Guruprasad By: Prajakta Patil Mayuri Negi Surbhi Jindal Sumit Shinde Karthik Mysore Sonia Grover
  2. 2. 2 | P a g e Table of Contents 1. Abstract 1.1 Executive Summary…………………………………………………………………….4 Retail in INDIA……………………………………………………………………………………4 Introduction of Indian retail industry background one successful retail company case from abroad 1.2 Starbucks Case Study……………………………………………………………….10 Indian Ecommerce-Online sales, Banking industry, one successful online company case from abroad 1.3 Amazon………………………………………………………………………………………16 Online sales business and Online Banking business 1.4 E-Banking in India…………………………………………………………………….18 1.5 Retail in India……………………………………………………………………………25 1.6 Key Sectors Trends in India…………………………………………………….26 1.7 Online Retail in India……………………………………………………………….28 Case study analysis of one successful and one failed retail business in India 1.8 Pantaloons……………………………………………………………………………….32 1.9 Subhiksha Retail Store…………………………………………………………….37 Case study analysis of one successful and one failed online business in India 1.10 flipkart…………………………………………………………………………………….43 1.11 Yebhi………………………………………………………………………………………48
  3. 3. 3 | P a g e 2. Introduction 2.1 Banking Industry in INDIA………………………………………………………….51 2.2 Objectives……………………………………………………………………………………59 2.3 Limits of the Report…………………………………………………………………….60 2.4 Methods of Enquiry……………………………………………………………………..60 2.5 Proposed Development……………………………………………………………….61 3. Methodology 3.1 Collection of Data………………………………………………………………………..61 4. Research Findings 4.1 Result and Findings………………………………………………………………………65 4.2 Consumer Behavior………………………………………………………………………65 5. Discussion 5.1 Problem formulation…………………………………………………………………….67 5.2 Management problem………………………………………………………………….67 5.3 Research problem………………………………………………………………………..67 6. Conclusions…………………………………………………………………………………………68 7. Recommendations……………………………………………………………………………..68 8. Exhibits……………………………………………………………………………………………….69 9. GRAPHS………………………………………………………………………………………….….72 10. Bibliography…………………………………………………………………………………….90
  4. 4. 4 | P a g e 1. Abstract Team went to Thane, Mulund, Karjat, and Ghatkopar. Basic age of prospects was 30- 70 and our concept behind the research was how safe it is for the consumers in using offline and online banking services. Team analyzed that people of age 30 - 45 mostly preferred online services depending on their education their knowledge of internet. Above the age of 45 most of them were preferring offline services and sometimes due to the reason that they don’t feel online service are safer for them or easy to use. We tried to understand their convenience. 1.1 Executive Summary Internet banking has attracted the attention of banks, securities trading firms, brokerage houses, insurance companies, regulators and lawmakers in developing nations since the late 1990s. With the rapid and significant growth in electronic commerce, it is obvious that electronic (internet) banking and payments are likely to advance. Researches show that impact of internet banking on cost savings, revenue growth and increased customer satisfaction on Industry is tremendous and can be a potential tool for building a sound strategy. However, it has raised many public policy issues before the banking regulators and government agencies. Interestingly, reliable and systematic information on the scope of internet banking in Indian context is still not sufficient, particularly what it means to the consumers and the bankers. Retail Industry in INDIA Introduction The Indian retail industry has presently emerged as one of the most dynamic and fast paced industries as several players have started to enter
  5. 5. 5 | P a g e the market. It accounts for over 10 per cent of the country’s gross domestic product (GDP) and around eight per cent of the employment in India. The country is today the fifth largest global destination in the world for retail. Several corporates have planned to exploit the opportunities in the Indian retail space, such as Reliance Industries Ltd (RIL), which has lined up capital expenditure of Rs 1.8 trillion (US$ 28.94 billion) for the next three years for its petrochemicals, telecom and retail ventures. With the growth in the retail industry, the corresponding demand for real estate is also being created. Further, with the online medium of retail gaining more and more acceptance, there is a tremendous growth opportunity for retail companies, both domestic and international. Market Size India’s retail market is expected to double to US$ 1 trillion by 2020 from US$ 600 billion in 2015 driven by income growth, urbanization and attitudinal shifts, highlighted the Boston Consulting Group and Retailers Association of India’s report titled, ‘Retail 2020: Retrospect, Reinvent, Rewrite’. While the overall retail market will grow at 12 per cent per annum, modern trade will grow twice as fast at 20 percent per annum, and traditional trade at 10 percent, according to a report titled Retail 2020: Retrospect, Reinvent, Rewrite by Boston Consulting Group and Retailers Association of India. The retail spending in the top seven Indian cities of India currently amounts to Rs 3.58 trillion (US$ 57.56 billion), with organized retail penetration at 19 per cent in 2014.(see fig 1.3 & 1.4) It is expected that the online retail will be at par with the physical stores in five years India is expected to become the world’s fastest growing e-commerce market on the back of robust investment activity in the sector and the rapid increase in internet users. It is expected that India’s e-commerce market will grow from US$ 2.9 billion in 2013 to over US$ 100 billion by 2020. E- trailers are betting on more Indians switching to shopping online, with a projection of 200 million new consumers by 2017, according to a report released last year by Accel, India
  6. 6. 6 | P a g e
  7. 7. 7 | P a g e Investments The Indian retail industry in the single brand segment has received foreign direct investment (FDI) equity inflows to the tune of US$ 275.38 million in the period April 2000—January 2015, according to the Department of Industrial Policies and Promotion (DIPP). With the rising need for consumer goods in different sectors including consumer electronics and home appliances, many companies have invested in the Indian retail space in the past few months. Some of them are: set up 30,000 to 50,000 retail outlets where its customers can load cash on their digital wallets. The company is also looking to enroll retailers - mostly kirana stores - as merchants for accepting digital payments. artnered with Jabong.com to provide mobile payment services to Jabong's customers. Data Wind has partnered with HomeShop18 to expand its retail footprint in the country. Under the partnership, HomeShop18 and Data Wind will jointly launch special sales programs across broadcast, mobile and internet media to create greater access of the latter's tablet range. Inc. and flip kart India will invest nearly Rs 2,300 crore (US$ 369.87 million) in the near term as they plans to acquire more customers in the country's fast-growing online retail market. and You has opened three distribution hubs in Surat, Mumbai and Bengaluru to hasten deliveries. -based Lulu Group plans to invest Rs 2,500 crore (US$ 401.98 million) in a fruit and vegetable processing unit, an integrated meat processing unit and a modern shopping mall in Hyderabad, Telangana.
  8. 8. 8 | P a g e Government Initiatives Ms Nirmala Sitharaman, Union Minister of Commerce and Industry, Government of India has stressed on India building a culture of branding and marketing its products to the rest of the world. The ministry is also willing to take steps to start a Free Trade Agreement (FTA) with the European Union (EU). The Government of India has taken various initiatives to improve the re Foreign Investment Promotion Board (FIPB) has cleared five retail proposals worth around Rs 420 crore (US$ 67.53 million) from companies such as Bestseller, Puma SA and Flemingo. Additionally, the board cleared three 100 per cent single-brand retail proposals worth Rs 222.5 crore (US$ 35.77 IKEA has entered into a memorandum of understanding (MoU) with the Government of Telangana to set up its first store in India at Hyderabad. IKEA retail outlets have a standard design and each location entails an investment of around Rs 500-600 crore (US$ 80.38- Government of India is also in the final phase of talks with the states for the Goods and Services Tax Bill to be implemented.
  9. 9. 9 | P a g e Road Ahead The share of e-Commerce is growing steadily. Customers have an ever increasing choice of products at the lowest rates. E-Commerce is probably creating the biggest disruption in the retail industry and this trend will continue in the year to come. Almost everything is sold on the internet now and this means that pretty much all of the retail industry faces the challenge of either being a part of e-commerce or taking it head on. For better prospects of this industry, as a whole, both organized and unorganized retail companies should work together to improve the overall retail industry, while generating new benefits for their own customers. Also, the retailers should take advantage of digital retail channels (e-commerce), which would enable them to spend less money on real estate while reaching more customers in tier-2 and tier-3 cities. Nevertheless, the long term outlook for the industry remains to be positive on the back of rising incomes, favorable demographics, entry of foreign players and increasing urbanization.
  10. 10. 10 | P a g e Introduction of Indian retail industry background one successful retail company case from abroad 1.2 Starbucks case study Starbucks Company Timeline 1971 Starbucks opens first store in Seattle’s Pike Place Market. 1982 Howard Schultz joins Starbucks as director of retail operations and marketing. Starbucks begins providing coffee to fine restaurants and espresso bars. 1984 Howard convinces the founders of Starbucks to test the coffeehouse concept in downtown Seattle, where the first Starbucks Cafe Latte is served. This successful experiment is the genesis for a company that Schultz founds in 1985. 1985 Howard founds Il Giornale, offering brewed coffee and espresso beverages made from Starbucks coffee beans. 1987 Il Giornale acquires Starbucks assets with the backing of local investors and changes its name to Starbucks Corporation. Opens in Chicago and Vancouver, Canada. 1990 Starbucks expands headquarters in Seattle. 1991 Becomes the first privately owned U.S. Company to offer a stock option program that includes part‐time employees. Opens first licensed airport store at Seattle’s Sea-Tac International Airport. 1992 Completes initial public offering (IPO), with common stock being traded on the NASDAQ National Market under the trading symbol SBUX. 1994 Opens first drive‐thru location. 1995 Begins serving Frappuccino blended beverages. Introduces Starbucks super‐premium ice cream. Announces second two‐for‐one stock split. Opens roasting facility in York, Pa.
  11. 11. 11 | P a g e 1996 Begins selling bottled Frappuccino coffee drink through North American Coffee Partnership (Starbucks and Pepsi‐Cola North America). 1997 Establishes the Starbucks Foundation. Opens stores in: the Philippines. 1998 Extends the Starbucks brand into grocery channels across the U.S. 1999 Acquires Tazo Tea. Acquires Hear Music, a San Francisco–based music company. Announces third two‐for‐one stock split. 2000 Howard Schultz transitions to chairman and chief global strategist, Orin Smith promoted to president and chief executive officer. Establishes licensing agreement with Trans Fair USA to sell Fairtrade certified coffee in U.S. and Canada. 2002 Establishes Starbucks Coffee Trading Company (SCTC) in Lausanne, Switzerland. 2003 Acquires Seattle Coffee Company, which includes Seattle’s Best Coffee and Torrefazione Italia coffee. 2004 Opens first Farmer Support Center in San Jose, Costa Rica. 2005 Jim Donald becomes president and chief executive officer to replace retiring Orin Smith. Acquires Ethos Water. Announces fifth two‐for‐one stock split. 2006 Launches the industry’s first paper beverage cup containing postconsumer recycled fiber. 2007 Eliminates all artificial Trans-fat and makes 2 percent milk the new standard for espresso beverages. 2008 Chairman Howard Schultz returns as chief executive officer. Launches My Starbucks Idea, Starbucks first online community. Launches Pike Place Roast.
  12. 12. 12 | P a g e 2009 Launches Starbucks VIA Ready Brew Coffee. Opens East Africa Farmer Support Center in Kigali, Rwanda. Launches my Starbucks and Starbucks Card iPhone apps and Starbucks Card Mobile payment. 2.2 Industry overview and analysis In Starbucks primarily operates and compels in the retail coffee and snacks store industry. After the decline in revenue in 2009, declining 6.6% to $25.9 billion, the industry grew at a low annualized average growth rate of 0.9% from 2008 till 2013 with current industry revenue at $29 billion in U.S. Starbucks dominates the industry with the market share of 36.7%, dunk in brands with 24.6% and other competitors like McDonald’s costa coffee, Tim Horton’s etc. The industry is in mature state with a medium level concentration Starbucks and dunk in brands make up more then 60-% of market share, giving them considerable market power in determining industry trends. The industry’s demand for premium coffee and snake product are mainly driven by a number of factors which include disposable income, per capita coffee consumption, attitude towards health, world pricing of coffee and demographics. Another crucial factor for analyzing the demand in the industry is the per capita coffee consumption where the increase in coffee consumption increases the revenue of coffee and snake shop. There is an expected shift towards healthy eating and diet among the consumers in 2014, and this could be a potential threat to the industry as they become more aware of issues related to weight and obesity. Porters Five Forces Analysis of the Retail Coffee and Snacks Industry:
  13. 13. 13 | P a g e 2.3 Starbucks core competencies The core competence of Starbucks has been its ability to effectively leverage their cornerstone product differentiation strategies by offering a premium product mix of high quality beverages and snacks. Starbuck’s brand equity is built on selling the finest quality coffee and related products, and by providing each customer a unique “Starbucks Experience”, which is derived from supreme customer service, clean and well-maintained stores that reflect the culture of the communities in which they operate, thereby building a high degree of customer loyalty with a cult following. Its other core competence is its human resource management's values-based approach for building very strong internal and external relationships with suppliers, which drives the successful deployment of its business strategy of organic expansion into international markets, horizontal integration through smart acquisitions and alliances that maintains their long-term strategic objective being the most recognized and respected brands in the world. 2.4 SWOT analysis Strengths: y Initiatives:
  14. 14. 14 | P a g e Weaknesses: -Cannibalization through overcrowding ge. Opportunities: advances Threats: 2.5 Starbucks Key Strategies: One of the key strategy that Starbucks followed since its inception is that of product differentiation offering differentiators such as premium product mix,
  15. 15. 15 | P a g e locations, coffee beverages reputation and supreme customer service that translated to building a premium valued brand which is costly to imitate for competitors. Starbucks has also followed a shrewd strategy of strategic alliance and making smart acquisitions. Starbucks didn’t follow franchising model and operated company oriented stores and joint ventures in international markets. Starbucks has made some key acquisitions such as Teavana (Tea products), Bay Breads (premium bread products), Evolution Fresh (fresh juice products) etc. to use the product diversification strategy. Starbucks acquisition strategy, as shown in their acquisition history in Appendix, has been horizontal, product and market extensions acquisitions. Another crucial strategy for Starbuck’s growth has been its international strategies of expanding into key developed and emerging markets to geographically diversify, and it has been highly successful with operation spanning 60 countries. All these strategies have derive considerable competitive advantage for Starbucks over its competitors. 2.6 Recommendations: ggest growth is in its International segment. The emerging markets of Brazil, India, China, South Africa and Mexico with a growing middle-class population continue to offer significant opportunities to add new stores and serve more customers. Starbucks has already made significant inroads into the Chinese market but there still is a lot of untapped potential growth in these markets. Starbucks should grow in these emerging markets by winning locally Starbucks must remain relevant to the customer in order to grow in these markets, and its management teams should have the freedom to operate within their overall framework to tailor store format, introduce local product mix and price points to the needs, lifestyles and tastes of each individual market/community. competencies and capabilities country to country and then gradually build profit drivers in several countries as it continues its global expansion in an organic way.
  16. 16. 16 | P a g e t growth opportunities in Tea and Fresh Juice products mix. They should build up these products along the same line of their core coffee products. beverages options, Starbucks should tailor its menu’s and expand to give healthier product offerings in its mix. have been wide fluctuations in the market prices of high quality coffee beans. Starbucks could mitigate this price volatility risky by implementing an effective hedging strategy like future contracts to lock in their estimated quantity inputs at a low swing price so that the future costs can be managed to a greater extent. 2010 Expands digital offerings for customers with free unlimited Wi‐Fi. 2011 Celebrates 40th anniversary with updated brand identity. 2012 Introduces Starbucks Blonde Roast. Indian Ecommerce-Online sales, Banking industry, one successful online company case from abroad 1.3 Amazon About the company: Amazon.com, Inc. is an American electronic commerce company with headquarters in Seattle, Washington. It is the largest Internet-based retailer in the United States. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys, and jewellery. The company also produces consumer electronics—notably, Amazon Kindle e-book readers, Fire tablets, Fire TV and Fire Phone — and is a major provider of cloud computing services.
  17. 17. 17 | P a g e Amazon also sells certain low-end products like USB cables under its in- house brand Amazon Basics. Amazon has separate retail websites for United States, United Kingdom & Ireland, France, Canada, Germany, The Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico. Amazon India will soon start offering music, movie and video streaming services in India. Amazon also offers international shipping to certain other countries for some of its products. In 2011, it had professed an intention to launch its websites in Poland and Sweden. The company's global headquarters are in 14 buildings in Seattle's South Lake Union neighbourhood. The European headquarters are in Luxembourg's capital, Luxembourg City. In Seattle, as of 2012, a three- tower headquarters near Amazon's existing buildings with a capacity of 12,000 employees is under construction. Problem in the Case Solutions Amazon web services face competition from established providers Dell, Microsoft and Google. MerchantservicesareincompetitionwithahostofInternetPaymentServiceprovid erslocatedacrosstheworld •Accumulated technological expertise in retailing •Customer management technology •3rd party selling platform i.e. Amazon marketplace
  18. 18. 18 | P a g e Online sales business and Online Banking business 1.4 E-Banking in India Introduction: Banking business in India is more than 300 years old with the first ever bank – the Bank of Calcutta originating in 1806 which later went on to become State Bank of India, the largest public sector bank today in the country. With the advent of Internet and Communication Technology (ICT) in the 21st century, the banking industry has gone through a transformation in the way business is done. Today most of the banking happens while you are sipping coffee or taking an important call. ATMs are at your doorstep. Banking services are accessible 24x7. There are more plastic cards in your wallet than currency notes. Banks today operate in a highly globalized, liberalized, privatized and a competitive environment. Researches show that impact of internet banking on cost savings, revenue growth and increased customer satisfaction on Industry is tremendous and can be a potential tool for building a sound strategy. However, it has raised many public policy issues before the banking regulators and government agencies. Interestingly, reliable and systematic information on the scope of internet banking in Indian context is still not sufficient, particularly what it means to the consumers and the bankers. As part of our assignment we have studied the research paper published by Dr. Roshan Lal and Dr. Rajni Salu in Asia Pacific Journal of Marketing & Management Review ISSN 2319-2836 Vol.1(4), December 2012 and another paper by Prof. Sufyan Habib, published in Research Journal of Management Sciences ISSN 2319-1171 Vol.1(3), 20-24, October 2012 Insights from the Literature:
  19. 19. 19 | P a g e Industry size, structure, growth & global positioning: E-Banking: E-banking is the term that signifies and encompasses the entire sphere of technology initiatives that have taken place in the banking industry. E- banking is a generic term making use of electronic channels through telephone, mobile phones, internet etc. for delivery of banking services and products. The concept and scope of e-banking is still in the transitional stage. E-banking has broken the barriers of branch banking. Evolution of e-banking: E-banking came into being in UK and USA in 1920s. It became prominently popular during 1960s through electronic funds transfers and credit cards. The concept of web-based banking came into existence in Europe and USA in the beginning of 1980s. It has been estimated that around 40 percent of banking transaction would be done through net. E-Banking in India: In India e-banking is of fairly recent origin. The traditional model for banking has been through branch banking. Only in the early 1990s there has been start of non-branch banking services. The good old manual systems on which Indian Banking depended upon for centuries seem to have no place today. The credit of launching internet banking in India goes to ICICI Bank. Citibank and HDFC Bank followed with internet banking services in 1999. Several initiatives have been taken by the Government of India as well as the Reserve Bank to facilitate the development of e-banking in India. The Government of India enacted the IT Act, 2000 with effect from October 17, 2000 which provided legal recognition to electronic transactions and other means of electronic commerce. The Reserve Bank is monitoring and reviewing the legal and other requirements of e-banking on a continuous basis to ensure that e-banking would develop on sound lines and e-banking related challenges would not pose a threat to financial stability.
  20. 20. 20 | P a g e To cope with the pressure of growing competition, Indian commercial banks have adopted several initiatives and e-banking is one of them. The competition has been especially tough for the public sector banks, as the newly established private sector and foreign banks are leaders in the adoption of e-banking. Indian banks offer to their customers following e-banking products and services: • Automated Teller Machines (ATMs) • Internet Banking • Mobile Banking • Phone Banking • Telebanking • Electronic Clearing Services • Electronic Clearing Cards • Smart Cards • Door Step Banking • Electronic Fund Transfer Internet revolution is global phenomenon and going by the current growth statistics, India expects a spurt in the Internet penetration in coming years particularly in the electronic commerce. It is an obvious notion that electronic (internet) banking and payments are likely to advance more or less in tandem with e-commerce. Researches indicate that internet banking has a significant impact on the business models of banks, securities trading firms, brokerage houses, insurance companies etc. Internet banking has also attracted the attention of, regulators and lawmakers in the developing nations since the late 1990s.
  21. 21. 21 | P a g e Internet banking is a cause of concern to majority of the offline banks who should be ready for an unprecedented competition from the non-traditional banking institutions that offer banking and financial services over the Internet. Although some of the traditional banks have started offering their services on line, it is only an extension of their offline services. Internet banking has now started motivating customers to park their funds with the online banks, which has a substantially impact on the deposit base of the brick and mortar banks. The use of technology in banking has direct relationship with the profitability. Cetris paribus, investment in electronic banking increase the profit margin of banks by reducing costs and increase in non- interest income, which will increases the Return on Assets (ROA) and Return on Equity (ROE). Cost-effectiveness in delivery of services directly implies comparatively high consumer satisfaction and a consequent change in the revenue model for the banks. Adoption of the internet mode of banking would result in increased consumer awareness, attracts the entry of global majors in the market and would lead to the emergence of open standards in the banking industry. The integration of the banking services with e-commerce and emergence of e-cash would positively affect the efficiency scores of the banks. However, Internet banking is a mixed blessing in the form of increased risk, the level of confidence reposed by the consumers and the problem of blending it with the physical system. Internet banking has brought about a new orientation to risks like settlement risk, international technology transfer risk, crime or fraud risk, regulatory avoidance risk, taxation avoidance risk, and competition risk. Basel II recommendation on operational risk also supports this hypothesis. In India, some banks like HDFC and ICICI have introduced payment gateways running on secure systems having firewalls against hacking. Convenience, safety and cost effectiveness are the jargons in the spectrum of online banking. Computerization in Public Sector Banks: Computerization as well as the adoption of core banking solutions was one of the major steps in improving the efficiency of banking services. It is
  22. 22. 22 | P a g e important to note that presently almost 98 percent of the branches of public sector banks are fully computerized and within which almost 90 percent of branches are on core banking platform. The awareness level of private sector Indian banks is the highest followed by the foreign banks. This is mainly due to the reason that private sector Indian banks are relatively new and they have positioned themselves as online banks from the very inception. Also, the various consumer groups do not perceive the public sector banks as online banks. However, the banks feel that their market perception is likely to change soon once they put on intensive advertising. Banks proposing the Initial Public Offer (IPOs) of securities in near future can think of simultaneously positioning themselves as the new generation banks. Electronic Clearing Cards: Now-days Electronic Cash is being used in place of hard cash. Electronic Clearing Cards such as debit and credit cards. Debit card allows „anywhere any time accesses‟ to the customers with their savings or current account. A customer possessing a Debit Card need not carry cash. Credit card also serves as convenient medium of exchange. It enables a customer to purchase goods or services within prescribed limits from certain authorized retail and service establishments without making immediate cash payments. It is also called plastic money. The most important difference between a Credit card and a Debit card is that while credit card is a post- paid and debit card is pre-paid. Bank Group-wise outstanding number of debit cards issued by scheduled commercial banks as at end March 2011. In 2010-11, Public sector banks have highest number of debit cards issued (170.34) which is 74.76 percent of total debit cards issued by the industry. Nationalized Banks (35.23) and SBI group (39.53) have high percent of cards issued as compared to Private sector banks (23.52). The share of new private sector banks is higher as compared to old private sector banks. Foreign banks have 1.72 percent of total debit cards issued.
  23. 23. 23 | P a g e Consumer Behavior and Concerns: Usage Patterns A significant variation exists between the various banks for the frequency of usage (F= 7.503) with high value for Indian private banks followed by multinational banks. Interviews conducted at banks revealed that the use of Internet banking is mainly attributable to day-to-day transactions, which is further confirmed by the questionnaire responses. Gender wise usage of the Internet banking reflects a polarization towards males. These results are obvious because the conventional, brick and mortar banking is also dominated by the male users. This implies a good scope for the Indian banks to capitalize the opportunity and focus on females. Results reveal that a significant portion of the frequent (1-5 times a month) internet banking users (37.8%) is a graduate followed by postgraduates who use Internet banking not more than 10 times a month. Interestingly, the professionals’ category is not the frequent user. After combining the categories of professionals and post graduates, it is established that they are the second grade users of internet banking though not using beyond 1-10 times a month. The study shows that the income groups 2 and 3 {Less than Rs.15000 and Between Rs.15000- 30000} are frequent users of the Internet banking. The expected level of performance and the actual performance of the conventional banking system shows a huge gap. The least mean scores of performance for parameters like accuracy, confidentiality, safety and empathy indicate significant dissonance between expectations and performance. However, trust is interestingly found to be a major area of concern. Lesser variances are obtained for speed and customization. Also, the computed value for F-ratio is significant for all parameters except confidentiality.
  24. 24. 24 | P a g e Recommendations: 1. E-banks should create awareness among people about e-banking products and services. Customers should be made literate about the use of e-banking products and services. 2. Special arrangements should be made by banks to ensure full security of customer funds. Technical defaults should be avoided by employing well trained and expert technicians in field of computers, so that loss of data can be avoided. 3. Employees of banks should be given special technical training for the use of e-banking so that they can further encourage customers to use the same. 4. Seminars and workshops should be organised on the healthy usage of e-banking especially for those who are ATM or computer illiterate. 5. E-banking services should be customised on basis of age, gender, occupation etc so that needs and requirements of people are met accordingly. Conclusion: In India, E-banking is in a nascent stage. No doubt Indian banks are making sincere efforts for the adoption of advanced technology and installation of e-delivery channels but still masses are wary of the concept. Banks are making sincere efforts to popularize the e-banking services and products. Younger generation is beginning to see the convenience and benefits if e-banking. In years to come, e-banking will not only be acceptable mode of banking but will be preferred mode of banking. Consumers feel that Internet banking is easier compared to conventional banking. Conventional banking lacks speed especially in case of public sector banks and Ratings on various parameters are comparatively higher in case of frequent users and high-income groups.
  25. 25. 25 | P a g e 1.5 Retail in India Introduction: The Indian retailing scene has never been more exciting both from consumers’ and marketers’ points of view. The Indian consumer is now spoilt for choice and has only one problem to deal with and that is the Problem of Plenty! From a marketer’s point of view, retail premise continues to be the battle ground, where brand destinies get decided based on the consumers’ preferences. Given the charm of the Indian consumer, the churn in the Indian retail scenario will continue. This report attempts to delineate key trends that are likely to define the Indian retail sector in 2014. Insights from the research paper published by KPMG KEY GROWTH ENGINES 1. Favorable demographics 70% of the 1.2 billion rural Indian population is a huge untapped market for the organized retail industry. The working age group 15-64 years constitutes 65% of the total population – the main driver for the consumer market going forward. 2. Rising Income levels and consumption expenditure India’s per capita income (PCI) recorded a 11.66% CAGR between 2001-2011 (from $ 500 - $ 1,500). IMF forecasts a PCI of USD 2,450 (2017). Private final consumption expenditure (PFCE) to increase from $1,077 billion in 2012 to $ 2,046 billion in 2017. 3. Changing consumer preferences Exposure to the western lifestyle is leading to a shift in consumer habits. The above trend along with rising incomes will create a market for newer offerings. 4. Growing number of working women population as per the NSS 66th round survey, as on January 2010, working women workforce stood at 127.3 million, which increased to 129.1 million in January 2012.
  26. 26. 26 | P a g e KEY GROWTH INHIBITORS High competitiveness Competition from the unorganized sector, making available an alternative channel of retail for consumer. New entrants in the organized sector increases competitiveness of existing players. Policy induced barriers Dual management of sectorial policies by the Ministry of Commerce (takes care of the retail policy) and, the Ministry of Consumer Affairs (regulates retailing in terms of licenses and legislations). Need for a single apex body to govern the industry. Difficulty in availability of finance Absence of „industry status‟, to the organized retail industry restricts financing ability and other fiscal incentives. Real Estate related challenges; Infrastructural issues High rental costs in prime areas, Service tax on rental value, limited space availability in prime areas; the supply chain is plagued with infrastructural issues: to poor cold storage, warehousing facilities etc. Shortage of Skilled Manpower-There are very few courses specific to the retail and graduates/post graduates from other streams are recruited. Additionally, retail training opportunities such as niche courses for areas like merchandising, supply chain and so on are limited. 1.6 Key Sector Trends in 2014 Food and Groceries Retail In Tier 1 cities Small is Big Business, Tier 2/3 cities will embrace larger retail formats Compact formats and hypermarkets will increase in tier 1& tier 2/3 cities respectively. Retail profitability depends a great deal on retail space productivity; hence particularly in tier 1 cities with burgeoning real estate costs, compact formats will be popular for food and grocery retailing. While Tier 2 and 3 cities will find themselves embracing hypermarkets particularly in highly attractive catchment areas more out of
  27. 27. 27 | P a g e an urge to experience modernized shopping premises. Franchising will also take its first strides in this sector blurring the boundaries between organized and unorganized grocery traders. Specialty products and private labels will both grow Organic foods, international foods, processed foods and wines will find its way in specialty food shelves. With retail houses like Future Group democratizing organized retailing in India, the patronage for in-store retail brands commonly referred to as private labels will continue to increase adding pressure on manufacturers’ brands. At the same time, specialty product categories such as organic foods, international foods and processed foods are gaining impetus in the Indian food retailing scene. Furthermore, particularly in more evolved metro markets, hedonic products such as liquor and wines gain entry among day to day groceries perhaps markers of the modern lifestyle. Fashion and Apparel Retail Competition from international brands and e commerce will intensify Indian youth particularly seem to get comfortable ordering online. Besides, their craving for anything foreign is legendary. Hence, Brick and Mortar apparel and fashion retailers will have to deal with competitive intrusion at two levels; one being continued entry of foreign labels to the Indian fashion landscape and secondly the evolving e-commerce space. Pricing for routine wear and exclusivity in case of event-wears will emerge as key differentiators in this sector. So, the coming year may witness most fashion and apparel retailers will join the multi-channel bandwagon (web and mobile spaces) to continue remain relevant to their target group.
  28. 28. 28 | P a g e Retailers take their in-house fashion brands seriously Profitability and patronage enjoyed by in-house fashion and apparel brands will prompt retailers to set up exclusive showrooms for them. These stores will assume compact formats with focus on deeper assortment and greater space productivity. Celebrity endorsements and in-movie/event placements may be sought to provide greater visibility and mileage to the in-house fashion brands. Brand Licensing will increase particularly in kids’ category Retail chains will increasingly house licensed brands particularly in kids category chiefly inspired by cartoons, animated characters and Bollywood and star cricketers. This would include proprietary content from home- grown and international production houses. 1.7 Online Retail in India Introduction: Many players were trying to revamp the structure of online shopping in India, including the global leader eBay. But things conceptualized in 2010, after increased competition in the market forcing better services and offers from online retailers. Extensive use of advertisements and presence on social media websites also helped these online shopping websites to gain brand recognition. Today, the services have improved so much that online marketers offer products at huge discounts, with delivery in 48 hours, along with a no question asked return policy. All these factors along with increasing penetration of internet, improved rate of literacy, introduction of safe & secure technology, etc. have been able to drive the online retail market in India.
  29. 29. 29 | P a g e Insights from CRISIL research paper (February, 2014) and Online report by ResearchandMarkets.Com: According to ‘India Online Retail Market Forecast & Opportunities 2016’, India will witness changing shopping trends in the next few years. India is set to become the third largest nation of internet users in the next two years itself. The online retail market in India is expected to grow immensely, given the rising middle class in India, with growing disposable income in hands and lesser availability of time to spend the same. ‘India Online Retail Market Forecast & Opportunities 2016’ discusses the following aspects related to online retail market in India: Online retail heat altering brick & mortar models In the last five years, online retail -- both direct and through marketplaces – has had a helluva ride, going from nascence to critical mass. So much so, today it has started to threaten the traditional brick-and-mortar retail. Recognizing the danger, many physical retailers have started to establish or beef up their online presence. CRISIL Research believes some of them, who play to their strengths of physical reach and multi-location presence, will be able to build successful and, more importantly, complementary, business models –just as it happened in the US. INDUSTRY SIZE India’s online retail industry has grown at a swift pace in the last 5 years from around Rs 15 billion revenues in 2007-08 to Rs 139 billion in 2012-13, translating into a compounded annual growth rate (CAGR) of over 56 per cent. The 9-fold growth came on the back of increasing internet penetration and changing lifestyles, and was primarily driven by books, electronics and apparel.
  30. 30. 30 | P a g e In terms of size, India’s online retail industry is very small compared with both organized and overall (organized + unorganized) retail in the country. This speaks volumes of its potential. We expect the industry’s revenues to more than double to around 18 per cent of organized retail by 2016 from around 8 per cent in 2013. Yet, its share of the overall retail (organized + unorganized) pie will be just over 1 per cent. That compares with 9-10% in the US and UK, and around 4-5% in China. Impact on business of traditional retailers evident Over the past 4-5 years, competition from online retailers such as Flipkart (in books, music and electronics), Myntra and Jabong (in apparel) has eaten into the revenues of physical retailers. Specifically, competition in the last three years has been intense compelling many to go online even as their net store additions slowed. Impact maximum in books, music & electronics segment The impact of online retail is most evident in segments where the product specifications are standard and differentiation low, such as books, music and electronics. Unable to match the huge discounts offered by online retailers, traditional booksellers and music stores are either shuttering outlets or folding up. For example, PlanetM, a part of Videocon-owned Next Retail, has been closing stores since 2012. Between 2011 and 2013, it shut over 100. As of March 2013, it had 85 open. As a part of this restructuring, PlanetM has adopted a kiosk-based model for expansion which saves lease rentals. Even in segments such as apparel, e-commerce companies have become extremely aggressive offering discounts throughout the year, and conducting shopping festivals repeatedly to play the volume game. This is difficult for a physical retailer because of the added costs of lease rentals and higher inventory. If that were not enough, the exponential growth of online retailers has got them the attention of venture capitalists and private equity players, affording relatively easier access to capital.
  31. 31. 31 | P a g e Traditional retailers being forced to move online To stay in the game, traditional retailers have been working on their internet strategy. For instance, Shoppers Stop, which started its online store in 2008, has boosted presence and improved features and user interface to bring its online visage on a par with leading e-commerce websites. The company is also trying to leverage its physical network by giving customers the option to return products at its stores. Apart from Shoppers Stop, Croma has an online store with options such as store pickup and cash on delivery. Even manufacturers of retail products such as Titan Industries (watches, jewellery, eyewear, etc) and Aditya Birla Nuvo (apparel - Allen Solly, Louis Philippe, Peter England, etc) have set up beachheads in cyberspace. Going ahead, we believe more and more traditional retailers will board the online bandwagon. CONCLUSION Ample proof traditional retailers can compete well online What we are witnessing in India today played out in the US about a decade-and-a-half back. That was when today’s big daddy’s such as eBay and Amazon debuted. In the next 4-5 years, by the turn of the century, they had become big enough to pose a threat to traditional retailers such as Wal- Mart, forcing them to come up with online strategies of their own. Today, after nearly a decade since the seismic shift began, some traditional retailers boast of a large online presence. Similarly, physical retailers in India will have to establish their presence online quickly. And, with the right strategies, they can even compete effectively. For instance, to tackle the queue problem at its stores, Wal-Mart allows customers to shop online and opt for either home delivery or store pick-up. Today, Wal-Mart is among the top 5 online retailers in the US with estimated revenues of USD 10 billion in 2013 from the online segment alone.
  32. 32. 32 | P a g e Case study analysis of one successful and one failed retail business in India 1.8 Pantaloons – A Success Story in Organized Retail Retail plays a major role in increasing circulation and sales for all kinds of consumer goods and services. Countries like USA, U.K. and China are successful examples of the same. Consumer retail is the second-largest industry in the United States, both by the number of establishments and by the number of employees. Wal-Mart, the world’s largest retailer, is also the world’s largest employer. It has become the most successful retail brand in the world due to its ability to leverage size, market segmentation, and its efficacy in assuming market dominance. Wal-Mart heads the Fortune magazine list of top 500 companies in the world. Retail Scenario in India: In India over 94% of the retail sector consists of traditional mom-and-pop stores and street-vendors. With no large players, infrastructure being far from adequate and a tiny part of the population being able to afford it, , Indian retail never attracted large business houses and majorly focused on niche product segments and luxury goods.. This was till they realized that retail in India is USD $353 billionindustry [BMI India Retail Report 2010] growing at a CAGR of 10% and contributing more than 25% to the country’s GDP. Today it might seem implausible that this important sector of the country’s economy had been overlooked by corporate giants. However they cannot be squarely blamed too. Indian retail has traditionally been an unorganized sector, where retailers lacked the means as well as the will to develop or expand. Retail could also never enjoy the support of the Indian consumer, who is famous for being miserly and treated shopping as a form of leisure than a necessary evil, thus enjoying the thrill of discovering bargains and discount deals on his own. Small gains, lack of infrastructure, an unattractive Indian consumer and absence of regulation never provided opportunities for retail giants to capitalize. Meanwhile, the Government preferred to remain silent while the unorganized retail sector provided a meagre standard of living to millions in
  33. 33. 33 | P a g e the country. Poverty plagued a majority of the population and the corporate giants preferred to spend their resources in areas like power and telecom where large-scale opportunities were abundant. Today the retail industry has witnessed a remarkable transformation. The New Story The country’s towering economic growth of around 8% has resulted in major shifts in the Indian economic class, with higher incomes leading to the growth of the Indian middle-class. This middle-class is aware of the standards of living in other countries, thanks to exposure through the tools of Globalization – the Media & the Internet. They have decided to thus adopt a “Spending” approach to improve their standard of living rather than the traditional “Saving” approach. The currently estimated value of organized Indian retail’s target population is larger than that of the entire United States. Voted the most attractive retail destination in the world for two years in a row, India is expected to witness 10% growth in its retail sector over the next few years (Source: “Retail in India – Getting Organized to drive growth.” CII-A.T. Kearney, Nov. 2006, Assocham Press Release). Recognizing the short-term and long-term growth of retail in India, a number of domestic business giants have entered the retail industry. We focus on the factors that have led to the success of Kishore Biyani’s Pantaloons Retail. Pantaloons’ Story Pantaloons’ success and continuous growth in the Indian organized Retail market can be attributed to a number of factors, some of which have been derived from the strategies of large retailers in the west, while others are completely tailor-made for the Indian market. What is evident at the outset is that Biyani has foreseen and understood the Indian retail roadmap better than anyone else. Pantaloons’ major advantage over its competitors in the retail sector has been its unique understanding of the Indian organized retail market with all its quirks, shortcomings and challenges. By creating a retail business from
  34. 34. 34 | P a g e the ground-up and expanding rapidly, Pantaloons has followed a Wal-Mart- like Pattern of growth. However, unlike Wal-Mart, it decided to experiment with as many retail formats, product-mixes and brands as was possible in order to gain maximum knowledge about the uncertain Indian mindset. In fact, newer entrants in the organized retail market would learn the ways of the unique Indian organized retail sector as well as find a way to combat Pantaloons’ dominant market share in almost all forms of organized retail a daunting task. What did it do Right? The Retail Experiment – Multiple Formats, Multiple Brands Pantaloons has experimented with every retail format possible. Most of their experiments have proven to be successful and Pantaloons continues to experiment while expanding existing ventures. However, the real reward of these experiments is the knowledge and experience gained- This was most elusive in a previously untouched and unknown organized retail sector. This is an example of Pantaloons adapting itself to the Indian market rather than attempting to copy a Wal-Mart. The experimentation process did not end with testing different store formats alone: Pantaloons is also experimenting with a variety of products. From men’s wear the company has moved on to introduce furniture, sportswear, kitchen appliances, food, electronics and children’s apparel. Again, it seems to know what works and what doesn’t in the Indian market, something that would not have been this apparent even 1 decade ago. Pantaloons has also introduced a number of private brands. For example, it has experimented with launching clothing lines based on famous Bollywood blockbusters. Within the brand retailing space, Pantaloons has also tied up with some of India’s most popular brands like Gini and Jony to sell them at their stores. Rather than attempt to compete with existing popular brands the company has decided to partner with them and leverage them in the ambiguous Indian market. These brands have achieved success and a loyal
  35. 35. 35 | P a g e fan following; Pantaloons’ move has brought in more customers and then they could retain. The competitors do have the opportunity to learn from the experiences of India’s largest retailer, but the experience that comes with managing these diverse retail formats in the Indian scenario is something that new entrants will have to learn on their own. Due to the pace at which Pantaloons had moved, it has made several sectors of organized retail out of anybody’s reach. The Right Joint Ventures at the Right Time In accordance with its experimentation policy Pantaloons has formed key joint ventures with a number of popular names like Staples and Starbucks. With its first-mover advantage, it actively shut doors for the competition by snapping up major brands before others could get to them. Versatile Retailing Rather than expand as a menswear retailer alone, Pantaloons’ policy of comprehensive experimentation has given it an important advantage – a versatile retail presence. Consumers see Pantaloons as an exclusive brand retailer, discount retailer, specialty retailer and food retailer: all at once. One of the reasons for this versatility is that the brand name has not been forced on, or even associated with the different products and stores other than the original menswear line. Instead, each store and product has been given its own identity and presence. Pantaloons is essentially an organized retailer in the guise of a large number and variety of unorganized retailers. This again represents the company’s unique understanding of the Indian scenario – consumers often feel threatened in a monopolistic environment, and are thus allowed to choose between multiple brands, all of which essentially belong to the same parent! Strengthening Back End Operations: Supply-Chain A robust Supply chain serves as the backbone of a successful retail chain in the long-run. Although the company ignored these aspects in initial phases due to the inadequacies in infrastructure, it rightly favoured
  36. 36. 36 | P a g e experimentation over organization. But to continue to grow at the pace it had acquired in the first few years, it needed to pay attention to its sourcing network, transportation system and other logistics. What Pantaloons is and will always have to improvise on is the absence of basic infrastructure like transportation and regulation. The pace of expansion of the retail industry is likely to outstrip that of development of the country’s infrastructure. Pantaloons will have to be Innovative in deciding as to how it compensates for these inadequacies while efficiently managing its supply chain. Money: The Ultimate Differentiator Pantaloons has the upper hand as compared to most potential foreign and domestic competitors. However the same characteristics that have made it an exclusive and versatile retailer can prove to be a disadvantage. Much of Pantaloons’ competition comes from either retail ventures of other large Indian industrial houses (Reliance Retail, Birla’s retail venture) or foreign retail giants (Wal-Mart). In other words, Pantaloons’ competition is rich, very rich. While the competition may not have made inroads into the Indian market as thoroughly as Pantaloons, it still has enough money to compensate for this shortcoming. Summary Through a carefully executed policy of comprehensive multi-format experimentation, Pantaloons has managed to understand and take advantage of the compressed evolution of the organized Indian retail industry (mentioned earlier) to become the dominant player. As far as industry knowledge, experience and skill are concerned, Pantaloons with its dream team is looking in good shape. Now it is facing stiff competition that is financially better-equipped. How it takes advantage of its existing resources, accesses additional capital and competes with its competitors in a race to develop an efficient supply-chain will determine the future of the company. While the task is daunting, Pantaloons has more leeway and an enormous head-start compared to anyone else.
  37. 37. 37 | P a g e 1.9 Subhiksha Retail Store BACKGROUND It was an era of software industry booming in the Silicon Valley, Retail Industry was striving hard to achieve the industry status. The retailers who made their presence were Raymond, Bata that were limited to a few locations and took long to practically arrive at a retail format. The retail sector was the second largest employer after agriculture with a value of 11 lakh crores. The Retail Market potential was good with an estimated growth rate of 35% in the organized retail which accounted for Rs 14,000 crores. Of all retail activity, food and grocery retailing accounted for 55%. There was a new phase in the retail scenario with more and more players joining the sector in different formats like malls, supermarkets, department stores, discount stores and new invented looks of bookshops, furnishing stores and chemist shops. Shopper’s Stop opened its first outlet in Mumbai, 1998. In 2004 retail began to scale up and more growth was expected in the future. It was an era of fast growing middle class with more than ever disposable income, a positive economic outlook and all time high foreign exchange reserve. THE RISE OF SUBHIKSHA Subhiksha Trading Services started in 1997 was a supermarket chain, founded by Subramanian, IIT and IIM-A graduate. Subhiksha started at Thiruvanmyur, followed by 49 branches across different parts of Chennai. By the end of 2008, Subhiksha had a pan India presence with stores across Indian states such as Delhi, UP, Punjab, Haryana, Gujarat, Karnataka, AP, Maharashtra and Tamil Nadu. It even opened specialized mobile shops called Subhiksha Mobile wherein mobiles were sold at a discounted rate. VISION - To deliver consistently better value and savings to all consumers on each and every item that they need in their daily lives, 365 days a year, without any compromise on quality of goods purchased. BOOMING INDUSTRY - New stores were added on a regular basis. There was presence of over 13 million retail outlets in the country. Indian
  38. 38. 38 | P a g e Retailing Industry was estimated to be $286 billion in 2004, and only about 1.6% share of this market was organized sector .The organized sector was expected to grow to almost Rs. 30,000 crores by 2005 representing 6% of total retail market, and top six cities will account for 66% of the total organized retailing. Based on GDP growth rate of 6-7% per annum, the retail industry expected to be $300 billion by the year 2010. About 90% FMCG sales occur through the kirana stores while the retail chains account for about Rs. 7500 crores. Subhiksha saw a great opportunity in this area and entered into groceries. “Our expansion is timed at a stage when the Indian retail industry is seeing a huge upswing with an exponential rise in retail investment”, says Subramanian. The year 2008 saw the up rise of retail chains across India with Bata India Limited, Shoppers Stop, Crossword chain of bookstores, Spencer’s. The year also beginning of many retail players such as Westside, Lifestyle, and Pantaloons. STRATEGY OPERATION – 1) Subhiksha had a central purchasing system to eliminate multiplicity of billings, which would occur if the stores were to make independent purchases. 2) It bought directly from distributors who sold at only a small margin above the mill prices and from around 150 manufacturing companies 3) It had three separate godowns for stocking pharmacy products, unbranded groceries and branded FMCGs. 4) It had ten tempo vehicles to supply its stores once a day. 5) All the stores were connected via Intranet to facilitate inventory planning. 6) It needed to integrate backwards into the supply chain, cut out middleman and offer better prices to consumers.
  39. 39. 39 | P a g e FINANCE - Huge quantity of purchase helped Subhiksha to cut costs by bargaining discounts. 1) Initially, it resorted to cash purchase to avail maximum discounts. 2) FMCG companies on realizing the customer potential increased credit lines to it. 3) In order to cut cost, along with bagging discounts on national brands it went a step further and aggressively promoted its private label. 4) By the end of 2004, around 25% of the company sales came from private labels. MARKETING – Brand Image: Subhiksha was portrayed as a trustworthy and reliable store that cared for the customer and offered the best price for products and thus valuing customer’s money. It was aimed at being perceived as trusted source of household needs, providing high convenience and accessibility. Brand Positioning: The unique proposition was that of value delivery unlike the neighborhood stores offering personalized service and small scale operations. The competitors lacked the technology robustness and failed to work on economies of scale. Subhiksha worked towards the image of a relationship builder than profiteers. ADVERTISING – initially only print advertisements and mailers were used to promote its services the communication through the advertisement was to position it as a retail store brand, the logo was shown prominently for brand visibility he premises that small amounts saved today could mean a better life tomorrow.
  40. 40. 40 | P a g e with its emphatic punch lines like Morcha against Kharcha, Bachat Mera Adhikar, and Subhiksha Mera Abhiman. PRODUCT MIX – Subhiksha had a wide range of FMCG products in its store – rice, dal, sugar, oil, butter, toiletries (like Lifebuoy, Colgate etc.), jam, tea, coffee and cosmetics (Ponds, Lakme etc.) & many more. PRICING – Subhiksha considered pricing of its products as a USP. It offered all goods at discounted prices similar to the Every Day low pricing (EDLP) founded by Walmart. Unlike other stores, the low prices at Subhiksha were not limited to a few goods or for a few specific days. Customers can get the same discounted prices on all items, on all days irrespective of whether they make a small or big purchase. Most importantly, the discount and customer savings at Subhiksha was comparatively higher than to those offered by other small and big retailers. FALL OF SUBHIKSHA The end of 2008 marked the closure of the most talk about retail stores Subhiksha. It was on the verge of bankruptcy. Subhiksha failed to pay its employees, supplies and landlords for quite many months in 2008. To add to its woes, its biggest investors Iventure (Venture Capital Arm of ICICI, India’s largest private bank) and Zash Investment (Azim Premji’s investment company) who had invested INR 230 crore did not extend any help. REASONS FOR FAILURE PRODUCT MIX – Subhiksha’s foray into drug retailing was challenging with its benefits in the future. The general medical stores opposed this initiative since they were
  41. 41. 41 | P a g e insecure about their own sales. Drugs usually have margin of 17-20% but Subhiksha sold drugs for a mere 7% margin. HUMAN RESOURCE – banking, financial services, pharmaceutical, and FMCG industries. OPERATIONAL ISSUES – lower prices, Subhiksha concentrated on direct procurement to avoid intermediaries. during the initial phase, the chain managed procurement per-store basis wherein the manager would replenish stocks at the end of each working day through cash as the chain went on an expansion spree, it had established 14 central purchase centers across the country and goods were sent to all the stores. INFORMATION TECHNOLOGY – management. in the year 2007, Subhiksha took a corrective step of implementing SAP Enterprise resource Planning (ERP) software but the project got stalled because the company ran into deep trouble. the plans to integrate all its stores via wireless communication to achieve operational efficiency was also shelved due to lack of funds. MARKETING – with the growth in the number of SKUs, the chain moved to Do It Yourself format from no touch format with the new format it was competing with the emerging supermarkets More, Reliance Fresh
  42. 42. 42 | P a g e parking space did not consider it fit to be called a discount supermarket nor a proper supermarket. FINANCE – It was in financial trouble right from the beginning: ing its first phase of expansion the first round of funding of INR 15 crore from I-ventures was received ient capital backup with debt to equity ratio being high. Subhiksha became the largest retail chain with 1480 stores stretched in 110 cities across the country. he company’s turnover with a continuous rise from INR 330 crore in 2005-2006 to INR 2,305 crore in 2007-2008 to a projected INR 4000 crore in 2008-09. employees for over 6 months. anks came to the rescue because of the economic downturn personnel responsible left with no protection left for the various stores and warehouses leaving around 600 of Subhiksha stores ransacked.
  43. 43. 43 | P a g e Case study analysis of one successful and one failed online business in India 1.10 FLIPKART.COM ABSTRACT: E-Retailing is a very new format for Indians in 2007 where in an E- Commerce giant has been born by the name FLIPKART. Started with an initial capital of 4 lakhs, now its turnover is about Rs. 4500 crores. Like the big game player in this field Amazon, the Flipkart also started its journey selling books online and it kept diversifying its reach by adding apparel, electronics, music etc. into its cart. Indians who are basically hesitant to pay before buying with options like Net Banking, Debit or Credit Card Payments it came up with the most impressive way to attract Indian consumers with the concept of COD (Cash on Delivery). This also covers the changes made with the time into the business model and various marketing strategies implemented which lead to success. This case study involves in knowing the working of Flipkart and its Success reasons. INTRODUCTION: E-Commerce in India. India is one of the fastest growing & emerging economies of the world, having a very huge consumer base & a big mass connected to Internet (approx. 100 million). The E-business trend have been catching up in the country with the increasing rates of local & domestic firms using the E-business model to do business which is very different from the traditional way of doing business in India, it has led to an interesting trend in the market for the online shopping starting right from ordering food, grocery, vegetables, fruits, taxis, electronics & so on. Internet users in India have gone up from 50 million in 2007 to 300 million in 2014. There is an opportunity in itself to connect the prospects of 1.24 billion to the internet. Investment banks believe India is on way to becoming one of the largest internet markets in the world. Morgan Stanley expects the size of the Indian internet market to rise from $11 billion in 2013 to $137 billion by 2020.
  44. 44. 44 | P a g e About Flipkart: Flipkart came into existence in the year 2007, with the aim of selling books to all those who have internet access. Founded by Sachin Bansal & Binny Bansal in Bangalore, Karnataka in 2007, both alumni of the Indian Institute of Technology Delhi. (See Exhibit 1) Before starting with their own venture, they worked for Amazon.com already a giant in Online Retail by that time. Starting with the concept of selling books online, which was a part of strategy used to gain the trust of target audience, where in which books can be easily brought from the publishers which can be easily packaged and delivered. With this strategy working very well and improving its product line extension with electronics, apparels, healthcare and personal products, shoes, toys etc. Started from 2 employees the company now has an employee strength of 4500. Flipkart started with a consignment model, but due to the delays occurred, it started to open its own inventories as it started to get investments. In 2014, company has 15000 employees. Initially funded by Bansal’s themselves with 4 lakhs, Flipkart since then has raised two rounds of funding from venture capitalists like Accel India (2009) and Tiger Global Management (2010). (See Exhibit 2a and 2b) BUSINESS MODEL: Flipkart started with Consignment Model (Procurement Based - On Demand) , transitioned to Warehouse Model (Inventory Led) to Marketplace Model today, where third-party merchants sell goods to shoppers through Flip kart’s site. Consignment Model (Procurement Based - On Demand): Initially the order needs to be registered, then Flipkart used to get the order from the publishers and then deliver to the consumers. In this way there used to be a delay in the order processing, which made the consumers to wait for a long duration to get the product received.
  45. 45. 45 | P a g e Warehouse Model (Inventory Led): As the future went on, due to the investments in Flipkart they bought warehouses and went into the Warehouse model where they used to stock the goods. Thus in this way the order time got reduced to a very healthy duration. Marketplace Model: The company realized the threat of foreign companies entering India like Amazon. So, like amazon and ebay, flipkart also decided to implement marketplace model. In this business model, flipkart will no longer be the sole seller (Retail) of various products. It welcomes large number of sellers to sell their product on well-established platform with solid logistics backbone. In this model, flipkart’s role will be to provide logistics service to the sellers who wish to sell through their website. Currently, more than 80 percent of the sales on Flipkart are made by WS Retail, which was set up by Flipkart founders Sachin Bansal and Binny Bansal in 2009 specifically so the company would have a marketplace structure — a necessity because Flipkart has foreign investors and Indian law doesn’t allow foreign investment in ecommerce companies that sell directly to customers. MARKETING STRATEGY: • Flipkart has been mostly marketed by word of mouth advertising. • Flipkart very wisely used SEO (Search Engine Optimization) and Google Ad-words as the marketing tools to have a far reach in the online world. Flipkart.com official Face book page has close to 9 lac 'likes'. • Flipkart First: (See Exhibit 3) With Flipkart First, the company is mainly providing better logistics services. Flipkart First is aimed at rewarding registered shoppers, which the company claims are about 18 million for the portal, as well as getting new ones on board.
  46. 46. 46 | P a g e Flipkart customers can avail a bunch of exclusive benefits and priority service features including free shipping for all orders, free in-a-day guarantee delivery, same-day-guarantee delivery at 50 per cent discount (Rs 70), and a 60-day replacement policy. • Big Billion Day: (See Exhibit 4) “The greatest sale ever”- Rs 600 crore worth of sales. 1.5 million shoppers • TV Advertisement: Flipkart had launched a series of 3 ads with the tag line - "No Kidding No worries". Kids were used to create the adverts to send out the message that if a kid can do it you can also do it. The advertisement shows the coolness of the brand.(See Exhibit 5) • App Sale: “Big App Shopping Days” Campaign (See Exhibit 6) Flipkart initiated the sale to promote its app across various platforms. • Print Ads: Full front Page ads in leading newspapers like The Times of India.(See Exhibit 7) STRENGTH •Brand •Supply Chain Management •Ads and Promotion •Strategic Acquisitions •Own online payment gateway solution Pay zippy WEAKNESS •Investor driven organization •Focus on expanding customer base rather than pulling profits •Penetration in Rural Areas
  47. 47. 47 | P a g e OPPORTUNITIES •Growth in E-Tail •Fastest Internet traffic growth •Physical Retail Stores THREATS •Competitors like Amazon.in •Customer Loyalty •Economic downturns •Price Wars FACTORS THAT LED FOR FLIPKART SUCCESS: 1. Amazing Speed of Service (Home Delivery) never seen in India. The experience of service delivery for online retail had been very bad for customers in India. It usually took more than 10 business days for a shipment to arrive at the destination (Sometime even more). Flipkart changed the game of e-commerce in India by started delivering products within 2-5 business days. This never seen service took fancy of the customers and built a trust in the brand. 2. Cash On Delivery payment option, 30 Day Replacement Policy, Free Shipping, Discounted Prices and Deals. In India people a very small population (approx. 1.5 % )has credit/debit cards and the amongst those who have it are wary of using them for making payments online due to lack of trust and internet frauds. The Cash on delivery option was the prime reason for the customer to make orders on Flipkart. The customer is satisfied to make payment in cash only after receiving the actual product. Besides this the 30 Day Replacement Policy, first of its kind in the E- commerce space in India further boosted the trust of the customer in
  48. 48. 48 | P a g e Flipkart. Adding to it due to bulk buying Flipkart offered many products at discounted prices and ran special attractive deals. 3. Simple and Intuitive GUI for shopping. Easy Navigation and filter search. Their website is great, easy to use, easy to browse through the products, add products to wish list or to a cart, get product reviews and opinions, pre- order products, make payments using different methods, in short hassle- free and convenient. 4. Increasing Disbursable income of youth, Increasing Internet Penetration in India: With growing economy especially in the service sector which generates employment for the youth adding to their Disbursable income, coupled with the increasing internet penetration helped Flipkart cruise in the Online Retail. 5. First Mover Advantage in Online Retailing in India. Although not the first mover but Flipkart was the first one to run the online retail show very professionally in India. Their Service Delivery, Call Centre Services, Product Guarantee, Replacement Policies etc. built a trust in the Customer. It helped Flipkart in retaining its customer base. Around 70% of the customers are repeat customers i.e. they shop at various point during a year. FAILURE STORY OF AN ONLINE STORE 1.11 YEBHI.COM ABSTRACT: Started in August 2009 Yebhi.com is the company which started with the name www.bigshoebazaar.com from Big Shoe Bazaar India Pvt Ltd. The success in footwear category made Yebhi to expand into other categories like Apparels, Accessories, Bags, Jewellery and Mobiles.
  49. 49. 49 | P a g e INTRODUCTION: Started by Manmohan Agarwal, Ex CEO Vishal Retail, the etailer grew from strength to strength to become the fastest growing company in lifestyle category in India. The enormous success that BigShoeBazaar witnessed when it first stepped into the footwear category inspired the company to explore its capabilities into newer segments like clothing, accessories, bags, jewellery and mobile phones. Yebhi.com was founded by the quartet of Manmohan Agarwal, Danish Ahmed Abdullah, Rajul Jain and Nitin Agarwal. Its Business Model is “First Buy & Sell Later”. The company first buys the goods in bulk according to the latest trends and stores them in the warehouse (a 1 lakh sqft in Gurgaon ). This in turn enhanced the credibility of Yebhi in the market and helped it to maintain high quality standards and a perfect fulfilment ratio. Thus, Yebhi.com possesses the hallmark of quality and the latest products. In terms of variety also, Yebhi.com stands apart. The e-commerce company substantiates its niche by following a four-step operational cycle—identifying the latest trends & demands of the products, buying those products, ensuring the quality check and finally selling them. MARKETING STRATEGY: • Yebhi.com is working on Inventory model. • Yebhi has adopted mass marketing strategy and offering every kind of product • 40% of customers visiting the site are women, so mostly they deal with softline products. • They are primarily focusing on digital media through search marketing and banner ads, but not on a large scale. FACTORS FOR THE FAILURE: 1. Inconsistency: Company’s failure to its inability to raise fresh capital in the face of increasing competition and its constant tinkering with the business
  50. 50. 50 | P a g e STRENGTH •Unique Products •Good Technology WEAKNESS •High Debt Burden •Weak Online Presence •Poor Customer Service •Weak Supply Chain OPPORTUNITIES •Have to come up with more funds to proceed further THREATS •Competitors like Amazon.in, Flipkart model. “There were 300 employees in March and now it is less than 100. Everything looks uncertain and there have been issues over late payments to sellers and even employees. Several sellers have de-listed themselves from the site. We have not got any fresh inventory in the last few months,” says an employee. 2. Fund Crunch: More problems cropped up after co-founders Nikhil Agarwal and Rahul Jain quit over differences with Manmohan Agarwal in January 2015. Soon after, the company witnessed several high profile exits, including Chief Business Officer Nikhil Rungta, who had joined the start-up from Google India. 3. Negativity: Besides, its tie-up with railway ticketing portal IRCTC to sell fashion failed as consumers went to IRCTC for booking tickets and not with the intention to shop. 4. Strong Competition: Yebhi didn’t take into account the vibrations of Amazon’s arrival in India on the market and was unable to ramp up its
  51. 51. 51 | P a g e offerings at the same speed and level as its competitors did, which led to change its model too many times thereby confusing the customers. 5. Lack of Advertisement: Now a day’s most of the investments in E- Retailing goes to acquire new customers through complete marketing campaigns and innovative ideas. But Yebhi.com has not advertised in the last 10-12 months. Alexa.com, which provides ranking for ecommerce companies globally, says Yebhi’s ranking (in daily traffic) slipped to below 5,000 in August from 2000 in June 2014. NEGATIVE REVIEWS ON YEBHI.COM: COMPARISION: YEBHI FLIPKART No separate mobile app for Yebhi.com Mobile app is much user friendly than desktop version Not much care taken while packaging Packaging is given utmost importance Employees are being removed from job Employee opportunities are increasing 2. Introduction 2.1 Banking Industry in INDIA The Indian banking sector consists of 26 public sector banks, 20 private sector banks and 43 foreign banks along with 61 regional rural banks and more than 90,000 credit cooperatives. Indicators 2011 2012 2013 Number of Commercials Banks 163 169 151 Number of Branches 94,019 102,377 109,811 Population per Banks (in thousands) 13 13 12
  52. 52. 52 | P a g e The largest bank, and the oldest still in existence, is the State Bank of India. The three banks were merged in 1921 to form the Imperial Bank of India, which upon India's independence, became the State Bank of India in 1955. For many years the presidency banks had acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935, under the Reserve Bank of India Act, 1934. In 1969 the Indian government nationalised 14 major private banks. In 1980, 6 more private banks were nationalised. These nationalised banks are the majority of lenders in the Indian economy. They dominate the banking sector because of their large size and widespread networks. The Indian banking sector is broadly classified into scheduled banks and non-scheduled banks. The scheduled banks are those which are included under the 2nd Schedule of the Reserve Bank of India Act, 1934. The scheduled banks are further classified into: nationalised banks; State Bank of India and its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks. The term commercial banks refers to both scheduled and non-scheduled commercial banks which are regulated under the Banking Regulation Act,. 1949 Indian Ecommerce and Banking Industry Introduction The eCommerce sector has seen unprecedented growth in 2014. The growth was driven by rapid technology adoption led by the increasing use of devices such as smartphones and tablets, and access to the internet through broadband, 3G, etc, which led to an increased online consumer base. Furthermore, favoured demographics and a growing internet user base helped aid this growth. In terms of highlights, the growth shown by homegrown players such as Flipkart and Snapdeal and the huge investor interest around these companies displayed the immense potential of the market. With the entry of eCommerce behemoths such as Amazon and Alibaba, the competition is expected to further intensify. Both these
  53. 53. 53 | P a g e international players come with deep pockets and the patience to drive the Indian eCommerce market. Also, their strong domain knowledge and best practices from their international experience give them an additional edge. Additionally, these companies have been part of markets where they have seen the eCommerce market evolve and are aware of the challenges and strategies to address issues thereof. Indian companies realise this, and are therefore aiming to continue their focus on expanding sellers and selection on their platforms, innovating on multiple customer touch points, and providing seamless and rapid delivery services in order to compete with the international entities. Competition is expected to continue, with these eCommerce companies experimenting with different ways to attract customers and increase online traffic. The Indian government’s ambitious Digital India project and the modernisation of India Post will also affect the eCommerce sector. The Digital India project aims to offer a one-stop shop for government services that will have the mobile phone as the backbone of its delivery mechanism. The programme will give a strong boost to the eCommerce market as bringing the internet and broadband to remote corners of the country will give rise to an increase in trade and efficient warehousing and will also present a potentially huge market for goods to be sold. For India Post, the government is keen to develop its distribution channel and other eCommerce related services as a major revenue model going ahead, especially when India Post transacted business worth 280 crore INR in the cash-on-delivery (CoD) segment for firms such as Flipkart, Snapdeal and Amazon. Both these projects will have significant impact on increasing the reach of eCommerce players to generally non-serviceable areas, thereby boosting growth. India’s overall retail opportunity is substantial, and coupled with a demographic dividend (young population, rising standards of living and upwardly mobile middle class) and rising internet penetration, strong growth in eCommerce is expected. From an investment perspective, the market is a primarily minority stake market, with maximum traction in early-stage deals. Such early stage funding will help companies develop a strong foundation to start from. With such strong market prospects and an
  54. 54. 54 | P a g e equally upbeat investor community, we look forward to many more eCommerce companies from India entering the coveted billion-dollar club. Industry on an upturn In 2013, Asia-Pacific emerged as the strongest business-toconsumer (B2C) eCommerce region in the world with sales of around 567.3 billion USD, a growth of 45% over 2012, ranking ahead of Europe (482.3 billion USD) and North America (452.4 billion USD). The top three were followed by Latin America, and the Middle East and North Africa (MENA) region, according to Ecommerce Europe1 . Globally, B2C eCommerce sales increased by 24% over 2012. This reflects the huge untapped potential of eCommerce by retail companies, both in their country of origin and across borders. eCommerce or electronic commerce, deals with the buying and selling of goods and services, or the transmitting of funds or data, over an electronic platform, mainly the internet. These business transactions are categorised into either business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), consumer-to-business (C2B) or the recently evolved business-to-business-to-consumer (B2B2C). eCommerce processes are conducted using applications, such as email, fax, online catalogues and shopping carts, electronic data interchange (EDI), file transfer protocol and web services and e-newsletters to subscribers. eTravel is the most popular form of eCommerce, followed by eTail which essentially means selling of retail goods on the internet conducted by the B2C category. According to Ecommerce Europe, country-wise, the US, UK and China together account for 57% of the world’s total B2C eCommerce sales in 2013, with China having total sales of 328.4 billion USD. As against this, India had sales of only 10.7 billion USD, 3.3% of that of China in 2013 with fifth position in AsiaPacific. This is despite the fact that India enjoys high demographic dividends just like China. India’s internet penetration with total e-households at 46 million against China’s 207 million is one of the reasons behind India’s poor B2C sales growth.
  55. 55. 55 | P a g e Indian Banking The optimism about Indian economic growth portends well for Indian banks. There are, however, challenges in retaining profitability and growth in the next decade. The industry has to live up to high expectations from several quarters. This report highlights ten major trends that will shape Indian banking over next decade. It identifies two critical and complex challenges thrown at the industry for which solution has to be found with urgency. The report outlines potential solutions and articulates key imperatives for government and regulation. The ten major trends to watch out for are: 1. Retail banking will be immensely benefited from the Indian demographic dividend. Mortgages to grow fast and will cross Rs 40 trillion by 2020. 2. Rapid accumulation of wealth in rich households will drive wealth management to 10X size. 3. “The Next Billion” consumer segment will emerge as the largest in numbers and will accentuate the demand for low cost banking solutions. 4. Branches and ATMs will need to grow 2X and 5X respectively to serve the huge addition to bankable population. Low cost branch network with smaller sized branches will be adopted. 5. Mobile banking will come of age with widespread access to internet on mobile. 6. Banks will adopt CRM and data warehousing in a major way to reduce customer acquisition costs and improve risk management. 7. Margins will see downward pressure both on retail and corporate banking spurring banks to generate more fees and improve operating efficiency. 8. Banks will discover the importance of the SME segment for profitability and growth and new models to serve SME segment profitably will be found. 9. Investment banking will grow 10X, driven by demand from corporate for transaction support and capital market access.
  56. 56. 56 | P a g e 10. Infrastructure debt will surpass Rs 45 trillion — half of which will be on bank’s books. It will touch the ALM limits of banks and will require a significant upgrade of banks’ risk management systems. Indian Banking 2020: Opportunities and Challenges Banks in India will be ending the last year of this decade on a high note. A spectacular growth rate coupled with an increase in profitability has led to an impressive performance. Starting at well above 10 percent in the early 2000s, the gross NPA ratio is currently below 3 percent. The cost to income ratio fell from well above 60 percent to below 45 percent. The Net Interest Margins (NIM) hovered around 3 percent with only a slight dip in the last 2 years as illustrated in Exhibit 1b. Considering the growth prospects of the Indian economy over the coming decade, the banking industry rightfully looks forward to a decade full of opportunities
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  58. 58. 58 | P a g e Financial Inclusion The future of democratic polity and social harmony of India rests on the premise of inclusive growth. Financial inclusion is a crucial driver for such growth. The political leadership is looking at the banking industry to deliver on this promise over the next few years. Already, additional competition is planned in the form of new licenses for private sector banks in the hope that this will lead to innovative business models for inclusive banking. This expectation will strengthen. Delay in solving the issue could lead to the banking revenue pool being opened up to non-banks to find more creative answers. Restoring the Public Sector Acquiring and retaining talent is the most critical challenge facing the banking industry, especially for the Public Sector, Units (PSU) where the situation is most urgent. A four decade–long legacy shaped by the constraints of state ownership, and short tenures of top management has
  59. 59. 59 | P a g e created a precarious instability PSU banks’ Human Resource (HR). The diminishing people advantage of the public sector banks has to be restored with urgency. This crisis has reached a tipping point, and the competitiveness of the entire sector hangs in the balance. Most importantly without addressing its HR issues, the public sector cannot rise to the challenge of financial inclusion in any meaningful manner. Definition Kotler(1994) “Consumer behaviour is the study of how people buy, what they buy, when they buy and why they buy.” Solomon(1995) Consumer is the study “of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires.” 2.2 Objectives  To understand the modern trend of consumer banking practices and is there any co-relation between online & offline services.  To analyze the problems involved in banking transaction.  To analyze the usage pattern of mostly used net banking services. The research questions, which emanate from above objectives are as: 1. Do you have a bank account? 2. If yes, which bank you are using? 3. How long you have been using this account? 4. What you prefer for banking activities? 5. What kind of services do you prefer offline? 6. What kind of services do you prefer online? 7. How many times you visit ATM in a month? 8. How often do you visit bank branch in a month? 9. For which specific surveys do you visit your bank branch? 10. Which online service do you use often? 11. How safe do you think online banking services are?
  60. 60. 60 | P a g e 12. Do you own Debit card/ Credit card? 2.3 Limits of the Report Area covered Tier1, Tier2, and Tier3 Sample size 360 While interaction we felt that since it was relevant to bank most of them were hesitating to reveal their experience with us thus not giving the exact details. Giving their exact details and for us to relate with those details were quite difficult. 2.4 Methods of Enquiry Mixed Questionnaire – whereby direct in person survey Research Design The present research is designed to study certain important consumer behavior in their banking practices i.e., online, offline or both. They are compared on the basis of the sub cities they belong and their preferences of banking. Hypothesis testing H1: Customer preference of online banking is more in tier1 cities compared to tier2 and tier3. H2: Perception about online banking for any customer has positive impact.
  61. 61. 61 | P a g e Tools Questionnaire depicting (Online, Offline and Both methods) employed by people. Procedure Data collected from 360 people belonging to Tier1, Tier2, Tier3 sub cities. Voluntary participation, importance of sincere responses were stressed. Initially participants filled personal data sheet. Later, were given clear instructions on how to answer. Clarified doubts to ensure everyone understood procedure. No time limit imposed. Administration done carefully. 2.5 Proposed Development  Development of E-banking/ Digital banking  Opening new bank branches in rural area  Convenient services for people like deposit from home  “Adhar Jan Dhan” schemes 3. Methodology In order to address the above questions an exploratory study was conducted. The idea was to probe and get deeper insight into consumer behaviour of online, offline and both consumer banking. 3.1 Collection of Data Literature Survey: Internet revolution is global phenomenon and going by the current growth statistics, India expects a spurt in the Internet
  62. 62. 62 | P a g e penetration in coming years particularly in the electronic commerce. It is an obvious notion that electronic (internet) banking and payments are likely to advance more or less in tandem with e-commerce. Researches indicate that internet banking has a significant impact on the business models of banks, securities trading firms, brokerage houses, insurance companies etc. Internet banking has also attracted the attention of, regulators and lawmakers in the developing nations since the late 1990s. Internet banking is a cause of concern to majority of the offline banks who should be ready for an unprecedented competition from the non-traditional banking institutions that offer banking and financial services over the Internet. Although some of the traditional banks have started offering their services on line, it is only an extension of their offline services. Internet banking has now started motivating customers to park their funds with the online banks, which has a substantially impact on the deposit base of the brick and mortar banks. The use of technology in banking has direct relationship with the profitability. Cetris paribus, investment in electronic banking increase the profit margin of banks by reducing costs and increase in non- interest income, which will increases the ROA and ROE. Cost- effectiveness in delivery of services directly implies comparatively high consumer satisfaction and a consequent change in the revenue model for the banks. Adoption of the internet mode of banking would result in increased consumer awareness, attracts the entry of global majors in the market and would lead to the emergence of open standards in the banking industry. The integration of the banking services with e- commerce and emergence of e-cash would positively affect the efficiency scores of the banks. However, Internet banking is a mixed blessing in the form of increased risk, the level of confidence reposed by the consumers and the problem of blending it with the physical system. Internet banking has brought about a new orientation to risks like settlement risk, international technology transfer risk, crime or fraud risk, regulatory avoidance risk, taxation avoidance risk, and competition risk. Basel II recommendation on operational risk also supports this hypothesis. In India, some banks like
  63. 63. 63 | P a g e HDFC and ICICI have introduced payment gateways running on secure systems having firewalls against hacking. Convenience, safety and cost effectiveness are the jargons in the spectrum of online banking. Questionnaire Questionnaires are very cost effective when compared to face-to-face interviews. This is especially true for studies involving large sample sizes and large geographic areas. Written questionnaires become even more cost effective as the number of research questions increases. They are easy to analyze. Data entry and tabulation for nearly all surveys can be easily done with many computer software packages. Questionnaires are familiar to most people. Nearly everyone has had some experience completing questionnaires and they generally do not make people apprehensive. Reducing bias there is uniform question presentation and no middle-man bias. The researcher's own opinions will not influence the respondent to answer questions in a certain manner. There are no verbal or visual clues to influence the respondent. They are less intrusive than telephone or face-to-face surveys. Survey Surveys are easy to develop, especially when using the advanced survey software solutions available today. Many researchers are tempted to do much of their data collection online; however, it is not always the preferred mode of data collection, especially if respondents are in hard-to-reach areas. Whether a researcher uses an online survey, mobile survey, paper survey, or a combination of all modes, the mode should depend on the type of study and the demographics of respondents. Online surveys and mobile surveys tend to be the most cost-effective modes of survey research, yet they may not reach those respondents that can only respond using alternate modes. Results of online surveys and mobile surveys may suffer and differ greatly if important respondents are left out of the research. Hard-to-reach respondents may be easier to reach
  64. 64. 64 | P a g e using more traditional methods such as paper surveys or face-to-face interviews. Advanced survey software solutions have multi-mode capabilities for online surveys, mobile surveys, email surveys, paper surveys, kiosk surveys, and more, giving researchers the ability to survey even the hardest-to reach consumers, and analyze data from all survey modes collectively. The ability to reach respondents is one challenge of surveys. However, surveys have several advantages and disadvantages. They are as follows: Advantages of Survey • Relatively easy to administer • Can be developed in less time • Cost-effective, but cost depends on survey mode. • Can be administered remotely via online, mobile devices, mail etc. • Conducted remotely can reduce or prevent geographical dependence. • Numerous questions can be asked about a subject • With survey software, advanced statistical techniques can be utilized to analyze survey data to determine validity, reliability, and statistical significance, including the ability to analyze multiple variables • A broad range of data can be collected • Standardized surveys are relatively free from several types of errors. 4. Research Findings 1) In Tier1 Cities, it is observed that the preferences of people are in descending order i.e, highest towards (both online and offline) banking methods then offline and then online banking methods. 2) In Tier 2 Cities, the same trend is observed in their preferences towards banking methods.

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