Customer Segmentation and Factors Affecting Willingness to Order Private Label Brands: An E-Grocery Shopper's Perspective

Customer Segmentation and Factors Affecting Willingness to Order Private Label Brands: An E-Grocery Shopper's Perspective

Khyati Jagani (Flame University, India), Falguni Vasavada Oza (MICA, India) and Himani Chauhan (MICA, India)
Copyright: © 2020 |Pages: 27
DOI: 10.4018/978-1-7998-0257-0.ch011

Abstract

E-grocery as a retail service of delivering grocers to consumer's door step is a new phenomenon for Indian consumers. Private label brands of e-grocery retail creates a new level of complication for consumers. As consumers are familiar with private label brands of popular supermarkets through past experience, they are not aware about private label brands of e-grocery retailer and therefore have not developed a level of trust with the private label brands making them reluctant to purchase private label brands from e-grocery retailers. However, there is lack of research done to understand the consumer attitude towards private label brands available on the e-grocery platform. Therefore, the purpose of the present study is to focus on two key areas: first, on types of private label brand buyers on e-grocery sites based on consumer reaction towards private label brands; and second, situations where consumers show their willingness-to-purchase private label brands on e-grocery site.
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Introduction

The retail industry has emerged as one of the most fast-paced and dynamic industries in India. Total Indian retail consumption expenditure is expected to grow from current US$ 1824 billion in 2017 to US$ 3600 billion by the end of 2020. It currently accounts for over 10% of India’s total GDP (Gross Domestic Product) and around 8% of total employment. At present Indian retail is 5th largest destination in retail space globally. The market size of Indian retail sector is expected to increase by 60% to reach US$ 1.1 trillion by 2020. Factors affecting the growth is increasing annual incomes, digital connectivity and changes in lifestyles. Whereas online retail is expected to grow at the rate of 31% CAGR (IBEF, 2019). Retail globally has been divided into two forms, first, traditional brick and mortar retail stores and second, digitally designed e-commerce stores. Advent of internet has transformed the format of purchasing of not only lifestyle and fashion productions but also everyday grocery (McKinsey Report, 2019). Grocery otherwise purchased by going to a retail store, can now be purchased online through e-commerce sites that specialize in grocery items. Electronic grocery shopping also known as e-grocery as a service offering has been in India since the early 2011 (Deloitte Report, 2017).

Grocery retail has faced more challenges than any other online retail since the birth of e-grocery in the early 2000s. Factors that obstruct consumer preference of e-grocery over traditional brick and mortar retail, include issues such as, due to the tangible nature of grocery consumers prefer to select products themselves, there is a major issue of perishability, consumers also do not get the opportunity to check quality as per their requirements, and finally availability of specific brands and products as per consumer preference (Canedy, 1999; Baker, 2000). However, inspite of all the challenges, consumers have also benefited from online grocery shopping. According to Aylott & Mitchell (1998), grocery shopping is perceived to be highly stressful due to aspects such as over crowding and queuing. For consumers buying of grocery is a regular chore that they highly dislike (Corral, 1999). Such consumers therefore prefer to purchase their grocery online due to the primary factor of convenience provided by e-grocery. Simplicity and rapidity of shopping grocery online provides consumers with yet another benefit (Anckar, et al., 2002).

Indian e-commerce has entered in every category starting from apparel to electronics to cosmetics and in the last 5 years it has penetrated the grocery segment as well. Most popular online supermarkets in India are Amazon Pantry, Big Basket, and Groffers (Motilal Oswal Report, 2019). Like any other online shopping site, a consumer can place an order for their grocery either on the e-retailer’s website or mobile application, pay for their cart, and their grocery items are delivered to their door step in, as early as 90 minutes of ordering and as late as a day, based on the date and time selected by consumer at the time of check out (Motilal Oswal Report, 2019).

Indian consumers are highly price sensitive and value driven. In several grocery categories such as sauces, pickles, Indian spices, flours, food grains, and bakery items, consumer tend to select store brand over national brand for two key reasons. First, price of private label brand is significantly lower than that of a national brand. And second, product that the consumer is looking for is only available in private label brand at that point in time. And therefore if the risk of trial of private label brand is not too high then the consumer is willing-to-purchase the private label brand over national brand (Mostafa & Elseidi, 2018). Prior experiences with the private label is a good factor for their future consideration of the e-store brand however it might not be the only factor causing their selection of store brand over the national brand. E-retailers have also introduced 2 tiered private label brands with different pricing, this further impact the consumer selection (Yang & Wang, 2010).

Key Terms in this Chapter

E-Grocery Retail: E-grocery is a business to consumer e-commerce for the primary purpose of selling groceries online. It concentrates on customer value, shopping convenience, quick door step delivery.

Willingness-to-Order: Willingness-to-order is likelihood of a consumer seeking out and ordering groceries through online retailer.

Private Label Brands: Private label brands are brands created, manufactured, sold and branded by a grocery retailer.

E-Shoppers: E-shoppers are those consumers that order their groceries online, to be delivered at home.

In-Depth Interviews: In-depth interviews are unstructured or semi-structured intensive individual interviews to explore their perspective on a particular idea, program, or situation.

Netnography: Netnography is ethnography on the internet, conducted to study communities and cultures through their digital communities.

National Brands: National brand is brand of a product owned by a producer or distributor. A national brand is distributed through several retailers, are widely advertised and branded.

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