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Online Shopper Segmentation Based on

Lifestyles: An Exploratory Study in India
a

Shweta Pandey , Deepak Chawla & Umashankar Venkatesh

a

International Management Institute, New Delhi, India

Great Lakes Institute of Management, Gurgaon, Haryana

Published online: 16 Mar 2015.

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To cite this article: Shweta Pandey, Deepak Chawla & Umashankar Venkatesh (2015) Online Shopper
Segmentation Based on Lifestyles: An Exploratory Study in India, Journal of Internet Commerce, 14:1,
21-41, DOI: 10.1080/15332861.2015.1006516
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Journal of Internet Commerce, 14:2141, 2015

Copyright # Taylor & Francis Group, LLC
ISSN: 1533-2861 print=1533-287X online
DOI: 10.1080/15332861.2015.1006516

Online Shopper Segmentation Based on

Lifestyles: An Exploratory Study in India
SHWETA PANDEY and DEEPAK CHAWLA
International Management Institute, New Delhi, India

Downloaded by [Indian School of Business] at 07:44 02 April 2015

UMASHANKAR VENKATESH
Great Lakes Institute of Management, Gurgaon, Haryana

This study explores online shopper segments in India based on their

lifestyles. A survey of 432 online shoppers revealed three key
shopper segments, namely, mature traditionalists, offer enthusiasts,
and technology mavericks. They were influenced by five key
factors, namely, Internet enjoyment and convenience, Internet
distrust, Internet offers, Internet logistical concerns, and Internet
self-inefficacy. Mature traditionalists are the relatively older,
married customers who prefer offers given by the brick-and-mortar
stores but are attracted to the convenience and enjoyment of buying online. Internet-based offers, in terms of selection and quality,
are the key attraction for the offer enthusiasts. Technology mavericks are the younger generation, avid users of the Internet having
no logistical or self-inefficacy issues. However, they do not trust the
security and privacy offered by Internet vendors. The research
concludes with marketing implications as well as suggested future
research directions.
KEYWORDS online shopping, lifestyles, India, segmentation

INTRODUCTION
The Indian e-commerce industry has undergone a sea of change evolving
from a pure online travel product-driven business to one which has spread
across various segments and categories. It has seen an amazing growth rate
of almost 35% CAGR, up from 3.8 billion USD in 2009 to 12.6 billion USD in
2013 (Price Waterhouse Coopers 2014). According to a study by American
Address correspondence to Shweta Pandey, International Management Institute, B-10,
Qutub Institutional Area, New Delhi 110016, India. E-mail: shweta.f13@imi.edu
21

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S. Pandey et al.

Express Bank (Price Waterhouse Coopers 2014), the number of online shoppers in the country is estimated at approximately 10 million as of 2013 and
has been growing at 35% over the last three years. Internet influence on
Indian purchase decision making is already comparable to that of developed
countries for categories like apparel, books, financial services, and travel
(Gnanasambandam et al. 2012). However, despite the tremendous potential
as well as growth of e-commerce, relatively little is known about online
shopper segments in India (Gehrt et al. 2012). Segmentation is important
for allowing a company to target offerings as per needs and responses of customers in order to maximize profits (Chang 1998). Brashear and colleagues
(2009) stressed the need to profile Internet shoppers of each country to allow
marketers to successfully develop and implement their online marketing
strategies as each country can have its own unique Internet shopper profile.
Plummer (1974) stated the need to go beyond the traditional demographic variables for segmentation purposes as consumers in the same demographic group can have very different psychographic makeups. Consumer
lifestyles have been argued to be an important antecedent in predicting consumer shopping behaviors (Solomon 2002; Sinha 2003). Lifestyle comprises
what consumers do, like, and think (Wells 1975). It is a key influencer of consumer consumption behavior (Plummer 1974; Bellman, Lohse, and Johnson
1999) and tends to give greater insight into why products and services are
purchased, thereby enhancing the capability of management in effectively
segmenting their target market and communicating to them (Brengman
et al. 2005; McDonald and Dunbar 2004). Lifestyles are conceptualized as a
function of internal customer beliefs modified via social interaction (Wu
2003) and have been used by several researchers to understand the consumption and shopping behavior of customers (Plummer 1974; Brengman et al.
2005). The current changes in society in terms of the increasing number of
single households, increasing number of working women, and growing purchasing power of consumers is slowly leading to the need for convenience
and enjoyment by consumers within the ease of their homes. Apart from that,
the rapid pace of change of technology is changing lifestyles of consumers,
and therefore, earlier lifestyle instruments may need further adaptation and
validation (Swinyard and Smith 2003; Brengman et al. 2005).

RESEARCH GAPS AND OBJECTIVE

Lifestyles are helpful in understanding customer psyche and therefore can be
used as basis for communicating and marketing to them (Brengman et al.
2005). Bellman and colleagues (1999) argued in favor of measuring consumer lifestyles and not just demographics for predicting both online and offline consumer shopping behaviors. Consumer purchases are impacted by
how individuals adopt specific behavior patterns as represented by their

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Online Shopper Segmentation in India

23

lifestyles, and thus the need to understand influence of lifestyles is imminent

(Howard and Sheth 1969; Engel, Blackwell, and Kollat 1978). Evanschitsky
and Wunderlich (2006), in their research on loyalty using Olivers (1997)
model of loyalty, concluded that personal characteristics of customers like
age, education, and income do not have a significant moderating role in
the latter links of the loyalty chain, namely between conative and action loyalty. They therefore suggested that demographic variables are not sufficient
for clustering customers and moving them from satisfaction to loyalty. They
also found that expertise level and price orientation of customers were significant moderators that impact affective loyalty. In the context of online
shopper segmentation, Soopramanien and Robertson (2007) found that
sociodemographic factors are less discriminating in segmentation than factors
specifically related to Internet shopping. They found certain variables like
confidence in paying bills online as key differentiators between online and
offline buyers. Consumer lifestyles have been significantly impacted by Internet. Consumers are now wired (Bellman et al. 1999; i.e., connected to the
Internet for years). The paucity of time has resulted in use of Internet for multiple tasks to the point of driving consumers to be attracted and reliant on it
for their daily activities (Assael 2005). Further, Van Raaij and Verhallen (1994)
argued for the need to use domain-specific characteristics like domainspecific attitudes, values, and personal characteristics as active segmentation
variables. Therefore, Internet-based lifestyles which reflect consumer activities, interests, opinions, and values (Bellman et al. 1999) linked to online
shopping form an appropriate basis for segmentation (Bellman et al. 1999;
Ernst and Young 2012). Most of the lifestyle-based segmentation studies have
been done in the technologically better developed countries having cultures
more diverse than India (Brengman et al. 2005; Allred, Smith, and Swinyard
2006; 4; Ye, Li, and Gu 2011). Therefore, this study addresses this research
gap by exploring Indian online shopper segments as a basis for their lifestyle
differences. Specifically, researchers address the following research objective: What are the different Internet lifestyles-based online shopper segments
in India and their characteristics?
The study can help e-marketers understand differences between emerging
markets like India (Gehrt et al. 2012) and more developed countries. It is
considered significant because the role of lifestyle-based segmentation in the
adoption of e-commerce has not been fully explored in India (Roy and
Goswami 2007), while it has been studied in other parts of the world, like the
United States of America (Swinyard and Smith 2003) and China (Ye et al. 2011).
The article is structured as follows. The following section gives a background of e-commerce in India followed by detailing of the theoretical
framework of segmentation and relevance of lifestyle-based segmentation.
Next, researchers describe the methodology followed by data analysis and
results. The study ends with overall implications, conclusions, and suggestions for future research.

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The Indian E-commerce Scenario

Globally, Internet penetration has been accounted as a major factor leading
to growth of e-commerce. India had a low Internet penetration of 10% (122
million users) in 2011, which is expected to increase to 28% by 2015 (Gnanasambandam et al. 2012). However, as of 2013, there has been a year-onyear growth of 40% over the previous year, leading to India having the third
largest number of Internet users in the world, estimated to be 205 million
after China and the United States according to a report released by the Internet and Mobile Association of India (IAMAI) and IMRB International in
November 2013 (Livemint.com 2014). In addition, mobile penetration is propelling the number of users using Internet, with the Internet user base estimated to reach 330 million370 million by 2015 (Gnanasambandam et al.
2012). The number of mobile Internet-capable devices has increased from
25 million in 2006 to 431 million in 2012 (Avendus.com 2013), a CAGR of
61%, enabling consumers to do shopping on the mobile itself, with approximately 10% of the online retail dollars in 2012 being spent on the mobile
(Etailing India and Comscore 2013). Further, broadband subscribers have
grown and are estimated to reach about 180 million by 2020 (Technopak
2013). The emerging use of broadband networks is enabling faster and easier
Internet access, leading to higher e-commerce opportunities (Etailing India
and Comscore 2013). This has also enabled the spread of online shopping
wherever there is mobile accessibility and hence opened up the rural household base as well (Subramanian et al. 2013). In such an emerging
e-commerce market with a high growth potential, there is a need to understand online shopper segments and drivers of the same.

THEORETICAL FRAMEWORK
Online Shopper Segmentation
There are various Internet-related factors that have been studied previously
to understand online shopper segments. A convenient website provides a
short response time, facilitates fast completion of a transaction, and minimizes customer effort, thereby propelling online purchasing (Schaffer
2000). However, Carol and Jay (2002) indicated that consumer perception
of convenience differs across shoppers. Some shoppers clearly want to purchase in the brick-and-mortar structures, while others find it easy to switch
across both online and offline modes. Customers are likely to trust websites
which have adequate security features wherein the privacy of the customer is
maintained and they feel secure while using the website (Wolfinbarger and
Gilly 2003). Bhatnagar and Ghose (2004) used perceived benefits and risks
of online shopping in terms of product risk (inability to examine products
online) and security risk (fear of loss of personal data privacy) and found

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Online Shopper Segmentation in India

25

three different segments with diverse demographics. Soopramanien and

Robertson (2007) found factors like consumer preferences and opinions
about purchasing of only branded products online, ease of shopping online,
risk of shopping for high value items online, convenience of online shopping, and perceived online financial and product risks as significant to understanding segmentation across Internet shoppers, non-Internet shoppers, and
browsers. Jayawardhena, Wright, and Dennis (2007) segmented UK online
users basis for their online shopping experience and purchase orientations
(active=control dimension, price orientation, convenience orientation, and
brand loyalty orientation) and found that purchase orientation does not have
a significant effect on purchase intention. They found five segments, namely,
active shoppers, price-sensitive shoppers, discerning shoppers (balancing
will to shop around with making a convenient purchase), loyal shoppers,
and convenience shoppers, with price-sensitive shoppers being the largest
segment. Also, they found that gender and prior purchase experience do
have a significant effect on purchase intention. Ganesh and colleagues
(2010) used shopping motivations (web shopping convenience, online
bidding=haggling, role enactment, avant-gardism, affiliation, stimulation,
and personalized services) and e-store attribute measures (e-store essentials,
offline presence, price orientation, website attractiveness, merchandise variety, website security, and certification) and segmented online shoppers into
seven segments and six segments, respectively. They found three shopper
segments that are unique to the online environment, namely, e-window
shoppers, interactive shoppers, and risk-averse shoppers. The segments
identified had varied perception of website convenience. A study done in
Canada by Aljukhadar and Senecal (2011) revealed three online user segments based on usage of the Internet: basic communicators (those who
use Internet mainly to communicate via e-mail), the lurking shoppers (those
who use Internet to surf and buy heavily), and social thrivers (who use Internet for social interaction). Jusoh and Goh (2012) found a significant relationship between e-commerce experience and attitude toward online shopping.
In summary, customer perceptions about Internet convenience, shopping
orientations, their activities related to usage of Internet, their perceived risk
levels specific to Internet, and their overall prior experience have been used
for segmenting online shoppers across countries. Swinyard and Smith (2003)
segmented online shoppers Internet lifestyles and identified four online
shopper segments in the United States, namely, shopping lovers who buy
online frequently and love to do so; Internet explorers who believe Internet
shopping is fun and can be termed as opinion leaders; suspicious learners
who have security concerns, are not too Internet savvy but keen to learn
the same; and business users who do not make personal online purchases.
The scale used by them was replicated by Brengman and colleagues
(2005) and Ye and colleagues (2011), who reported six lifestyle factors
underlying the scale: Internet convenience, perceived self-efficacy, Internet

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logistics, Internet distrust, Internet offer, and Internet window shopping

across Belgium and China, respectively. Using this scale, Brengman and colleagues (2005) found four online shopper segments (tentative shoppers, suspicious learners, shopping lovers, and business users). Ye and colleagues
(2011) in China also found similar segments but with some differences on
dimensions linked to logistical challenges and online security. Chiu and colleagues (2014) also used a modified version of the Internet-lifestyle scale and
found six dimensions comprising of Internet convenience, Internet distrust,
Internet window shopping, Internet logistics, bricks-and-mortar, and Internet
offers, which they used to cluster online shoppers of sporting goods and
found three clusters, namely, shopping lovers, tentative shoppers, and suspicious shoppers.

Research Done in India

As per a report (The Economic Times 2013) by an apex trade organization in
India, Assocham, aggressive online discounts, rising fuel prices, and availability of abundant online options are stated as the drivers for the growth
for online shopping. Further, factors such as delivery-related issues, quality
of delivered goods, and fears of financial loss or fraud along with
payment-related issues like not having credit or debit cards to pay online
act as inhibitors. The low and even negative rate of growth of credit cards
and a low rate of growth of debit cards from 2011 to 2013 has resulted in
an estimated only 6%8% of users transacting online (Avendus.com, 2013).
However, the credit and debit card spends (in value) are showing a healthy
rate of growth in the same time period, which has been attributed to the
growth of online shopping (M.economictimes.com 2013). E-retailers have
introduced tactical measures like cash on delivery as a new payment mechanism for addressing financial fears related to transacting online and infusing
trust into the websites (Sinha, Gokhale, and Rawal 2014), resulting in further
acceptance of online shopping. A report by a leading consultant (Kakroo
2012) estimated that eight out of ten online purchases made in India are
cash-on-delivery.Online financial fears are being addressed by ticketing firms
like Redbus.in by introducing processes like payment in cash only
post-delivery as an alternative to the use of credit cards (Gnanasambandam
et al. 2012). The consumers lack of Internet self-efficacy impacts their perceived risk and thereby their intention to purchase products online (Dash
and Saji 2007). Apart from that, logistics in India still is an underdeveloped
stage with various infrastructural and regulatory issues. While big multinational companies like DHL and Fedex operate in India, the last mile delivery
is done through third-party couriers leading to delays and other issues
(Forbes.com 2013). Some firms like Flipkart have opened up their own logistic units and have further become logistic service providers to other
e-retailers (Technopak 2013). Ability to see, touch, and feel has been cited

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27

as a key driver toward online purchase decision process for some customers
(Gupta, Handa, and Gupta 2008). Also, when shopping on the Internet, customers cannot actually see or handle the product so they are unsure about
consistency of representation on the web with what is received; hence, the
lack of physical feel can be an important dimension to consider (Prasad
and Aryasri 2011; Jain and Jain 2011). Jain and Jain (2011) found that Indian
online shoppers are impressed by intangible value products rather than the
frequently purchased products. Interestingly, another study found higher
openness of Indian consumers in disclosing their personal information on
the Internet as compared to US consumers (Gupta, Iyer, and Weisskirch
2010). A study found that online attitude and perceived benefit of Indians
varied across different products (Hemamalini 2013). Another study found
that shoppers demographic factors have significant association with retail
format choice decisions (Prasad and Aryasri 2011). Gehrt and colleagues
(2012) used shopping orientation, namely value orientation (price and quality), quality with convenience (convenient shopping), recreation (shopping
as a form of recreation), reputation with convenience orientation (familiarity
and convenience), and website attributes to segment the Indian market. They
found three segments: value singularity (older, less experienced users who
are motivated by price), quality at any price (younger experienced Internet
users who look for quality of products), and reputation=recreation (high on
recreation orientation with lesser number in managerial positions), with the
latter two segments being the predominant online shoppers. The study found
a difference in Indian shopping orientations as compared to more developed
economies. The finding that the value singularity segment is not the pioneer
online shopper in India contrasts with the early online shoppers in the United States, who have been often found to be motivated by price.

Relevance of Lifestyle-Based Segmentation

Donthu and Garcia (1999) cited that development of the Internet market has
been driven by not just technological changes but also changes in lifestyles. A
report on Indian e-commerce by Ernst and Young (2012) also affirmed that
the onset of Internet commerce coupled with changes in consumer lifestyles
has brought along myriad changes in Indian shoppers with online shopping
becoming an alternative to conventional shopping. This is reflected by the
formation of a sizeable class of Internet Habituated customers (Technopak
2013). Time spent by users on the Internet is rising, and more sophisticated
categories of Internet usage like e-mail, social networking, and purchasing
online are growing more rapidly than reading and browsing (Gnanasambandam et al. 2013). Numerous consumer benefits like ease of information,
instantaneous price comparisons, and convenience of shopping at home
are bringing about a substantial change in the shopper behavior in India.
With an increase in working couple numbers, rising disposable incomes,

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S. Pandey et al.

and lesser time at hand to spend using traditional shopping formats,

convenience-driven online shopping is growing (Sinha et al. 2014). According to a report by IAMAI (2011), there has been an evident change in the
shopping style of Indian online users who are observed to actively indulge
in purchases as part of their daily digital interactions post-2009. The Internets
influence on buying decisions of consumers is rapidly growing, thereby
affecting their preferences and each of the pre-purchase, purchase, and
post-purchase stages (Subramanian et al. 2013). Such Internet impact on
shopping, more aptly classified as Internet-related lifestyles, is therefore relevant for segmenting Indian online shoppers.

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RESEARCH METHODOLOGY
Survey Design
Lifestyles comprise of activities (how people spend their time and money),
interests (things that consumers consider important), and opinions (the view
they have of themselves and of the world around them) of consumers (Wells
and Tigert 1971). Such activities-, interests-, and opinions-based definition of
lifestyles has been widely used in numerous research studies (Plummer 1974;
Lee et al. 2009) and further developed in context of online shopping by Swinyard and Smith (2003). Given the relevance of using Internet lifestyle as a
basis for segmentation, researchers adapt the Swinyard and Smith (2003)
scale covering the main interests and opinions of Indian Internet users for
segmenting Indian online shoppers. The scale has been replicated and validated across other countries and is therefore apt as a starting point (Karatepe,
Yavas, and Babakus 2005) for adaptation to the Indian context. However, the
current researchers modified and added certain items based on an initial
qualitative investigation regarding attitudes, drivers, and inhibitors of Internet
shopping. To explore the contours of the psychographics associated with
Internet shopping, they conducted 10 in-depth interviews spread across various age groups. In addition, they conducted one focus group discussion with
college students including both males and females. The additional items generated from the qualitative inputs were combined with those existing in the
Internet lifestyle scale by Swinyard and Smith (2003). This was done post
reviewing and discussing iteratively with several marketing academics and
researchers for content and face validity. A structured questionnaire with
initial questions related to demographics, items bought online, frequency
of purchases in the past three months, as well as lifestyle items was prepared
and sample tested. A qualifying question at the beginning of the questionnaire was added wherein only people who had bought anything online in
the past six months were asked to proceed with answering the remaining
questions. Forty-two lifestyle statements measured on a 5-point Likert scale
(with 5 implying strongly agree to 1 implying strongly disagree) were

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29

finalized. Out of the 38 items in the original scale developed by Swinyard and
Smith (2003), 36 were used with minor language modifications. Three new
statements specific to media drivers for online shopping, one item related
to the mode of payment (cash on delivery; highly prevalent in India), as well
as two items related to Internet-related negative beliefs were added. Demographic variables were modified to suit the Indian perspective.
The study was done using a convenience sample of online shoppers.
Though most of the researchers tend to use online survey method
(Syzmanski and Hise 2000), the current researchers looked at both an online
and offline survey mix to capture consumers with different levels of Internet
self-efficacy as well as Internet usage levels because India is still in its nascent
stage of adoption of e-commerce. The Internet penetration levels are still low
in India as compared to more developed countries (Gnanasambandam et al.
2012), with people slowly adopting online shopping. A total of 453 responses
were collected, out of which 424 were found complete and usable for the
study.

DATA ANALYSIS AND RESULTS

Sample Characteristics
In the present study, the demographic profile was predominantly males
(69.3%). This can be compared to the Indian online shopper profile found
in a research by Comscore for Assocham wherein 60% of the online shoppers
were males. While the sample tended to be young with 56.7% shoppers
being in the 1835 years age group, other age groups were also well represented with 23.9% in the 3544 year age group and 19.4% in the 45 and older
age group. The occupation distribution of the sample was as follows: 32.8%
students, 48.3% professionals or in service, 12.3% businessmen, and 6.6% in
other professions including homemakers and retired people. The education
mix consisted of 54.5% undergraduates or graduates and 45.5%
post-graduates. In terms of Internet usage, around 12.5% used Internet for
less than an hour each day, 49.8% used it for 1 to 4 hours per day, 25% used
it for 4 to 8 hours per day, and 12.7% used it for more than 8 hours per day.
Clothing and accessories was found to be the highest purchased product
category.

Factor Analysis
Exploratory factor analysis was done on the 42 lifestyle-related items to
assess their dimensionality, factor structure, and measurement properties.
The KMO measure of sampling adequacy (0.808) and the Bartletts test of
sphericity (190 d.f., p .00) suggested suitability of factor analysis (Hair
et al. 2010). A varimax rotated (principal component analysis method) factor

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S. Pandey et al.

analysis was done. Factors contributing were identified based on factor loadings of 0.50 and above as well as adequacy on variance explained of 60%
(Hair et al. 2010). Based on content validity, inputs from marketing
academics and researchers, five factors were finalized, as shown in Table 1.

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Internet enjoyment and convenience: Items such as, I enjoy buying things
on the Internet, I like having products delivered to me at home, I like
browsing on the Internet, I would love to shop sitting at home, and so
on. These correspond to the dimensions of enjoyment and convenience.
Convenience as well as enjoyment orientations are also revealed across
other studies (Khare and Rakesh 2011; Brengman et al. 2005; Brown, Pope,
and Voges 2003; Donthu and Garcia 1999). In the Indian context, with
working couples and nuclear families on the rise especially in the urban
areas, the constraint upon time has escalated the need for convenience.
Internet distrust: Items such as, I worry about my credit card number
being stolen on the Internet and I am afraid of buying on the Internet

TABLE 1 Factors Extracted with Items and Cronbachs Alpha

Factors

Items

Internet enjoyment I enjoy buying things on the Internet.

and convenience I like having products delivered to me at home.
I would love to shop sitting at home.
I like browsing on the Internet.
I think online buying is (or would be) a novel, fun
way to shop.
It is easier to do shopping online.
Internet distrust
I worry about my credit card number being stolen
on the Internet.
I am afraid of sharing my personal details like
phone number etc. on the Internet.
I am afraid of buying on the Internet.
I just do not trust Internet retailers.
I want my purchases to be absolutely private.
Internet offers
I think Internet shopping offers better selection
than local stores.
Internet sites provide offers not easily available at
the local stores.
I think Internet shopping offers better quality than
local stores.
Internet
I do not know much about using the Internet.
self-inefficacy
I find the Internet ordering process hard to
understand and use.
None of my friends shop on the Internet.
Internet logistical
Returning products purchased online is difficult.
issues
I find it easy to return products bought online-R.
I dislike the delivery problems of online shopping,
for example, difference in actual product
received versus what I saw on the website.

Item Cronbachs
loading
alpha
.763
.746
.720
.671
.596
.582
.802

0.81

0.78

.790
.701
.681
.575
.803

0.69

.701
.640
.791
.725
.721
.844
.801
.653

0.68

0.72

Online Shopper Segmentation in India

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31

point toward the lack of trust on technology, security, and privacy aspects.
Issues related to online distrust are highlighted in other studies done in
India wherein the researchers found that young adults and students do
not trust Internet merchants in terms of honesty and sincerity and also feel
more comfortable doing online transactions through cash (Gupta et al.
2008; Khare, Singh, and Khare 2010; Gehrt et al. 2012).
Internet self-inefficacy: Items such as, I do not know much about using
the Internet correspond to the lack of adeptness at using Internet for
shopping. The in-depth interviews conducted also lent support to this
feeling of not knowing much or enough about using computers for the
purpose of shopping. Another study done in the Indian context found
consumer self-inefficacy impacting the perceived risk and thereby intention to purchase products online (Dash and Saji 2007).
Internet logistic issues: Items such as, Returning products purchased
online is difficult relate to the delivery and return issues of online
shopping. One can correlate these to the impact of immediate delivery
in the brick-and-mortar shopping scenario, which was also highlighted
in the focus group discussion. Srikanth and Dhanapal (2011) stated that
challenges like delivery on time and handling returns need further
addressed in India.
Internet offers: Items such as, I think Internet shopping offers better
selection than local stores, I think Internet shopping offers better quality
than local stores, and Internet sites provide offers not easily available at
the local stores relate to beliefs about Internet sites offering better quality,
selection, and products which are not readily available in local stores.
Subramanian and colleagues (2013) found that Indians value the variety
offered online with lot of them willing to pay an online premium for
authentic products that are not readily available offline.

The above five dimensions have also been reported in previous studies
(Swinyard and Smith 2003; Brengman et al. 2005; Ye et al. 2011).

Cluster Analysis
Factor scores derived from above analysis were used to derive shopper
segments. Hierarchical cluster analysis was used to determine the optimum
number of clusters followed by k-means analysis (Hair et al. 2010).
Non-hierarchical algorithms like k-means analysis enhance the cluster
solution validity as they are not affected by outliers to the extent of hierarchical algorithms (Hair et al. 2010). Further discriminant analysis was done to
validate the cluster solution wherein researchers tested the hypothesis that
the group means of the factor scores for the clusters are equal. Wilks lambda
(function 1-0.208, significance 0.000; function 2-0.461, significance 0.000)
established the existence of three valid groups (Hair et al. 2010). Further,

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S. Pandey et al.

TABLE 2 Centroids for Each Cluster

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Internet
Internet
Internet
Internet
Internet

enjoyment and convenience

distrust
offers
self-inefficacy
logistical issues

Mature
traditionalists

Offer
enthusiasts

Technology
mavericks

0.200
0.093
0.494
1.239
0.259

0.894
0.785
0.363
0.166
0.327

0.328
0.323
0.038
0.439
0.258

classification results showed that 99.1% of the original cases and 98.8% of the
cross-validated grouped cases were correctly classified. Finally, three clusters
were identified, which satisfied the criteria of substantial size, clear differentiation from other clusters, internally consistent characteristics, and logical
interpretability. The clusters were named based upon the factor loadings
and profiling. Table 2 gives the cluster centroids for each cluster.

Online Shopper Segments

Occupation, age, marital status, annual household income, and time spent
per day on Internet were found to be significantly different across segments,
whereas education, gender, and buying frequency in the last six months
were not, as depicted by the chi-square test results given in Table 3. Clothing
and accessories was found to be the most frequently bought product with at
least 30% of customers across each segment buying the same with highest
frequency (Table 4).
MATURE TRADITIONALISTS
This constitutes about 22% of the population with an average age of 39 years.
This segment includes 70.2% married. They have not yet caught onto the
technical aspects of Internet shopping as depicted by their high level of
self-inefficacy (cluster centroid of 1.239, Table 3). However, they seem to
moderately enjoy the convenience offered by the online shopping mode.
They buy health and beauty products in a significantly higher proportion
as compared to other clusters (Table 4). Delving deeper into the other
occupation category, almost 17% of these are retired people or homemakers,
and 64.9% are working or have their own business. Given that a significantly
higher proportion of this cluster lies in the 45 years and above age group and
almost 81.9% of them are either working or retired or homemakers, these
customers may be buying products they use (e.g., health and beauty) due
to the convenience it offers them. Subramanian and colleagues (2013) found
that Indians are willing to pay an online premium for authentic products that
are not readily available offline. For example, e-retailers like Healthkart.com

33

Online Shopper Segmentation in India

TABLE 3 Segment Descriptions Using Demographic and Purchase Variables (p values denote
significance of the chi-square tests)

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Mature
Offer
traditionalists enthusiasts
Market share
Occupation (p = .00, significant)
Student
Business
Profession=Service
Homemaker=Other
Age (p = .0, significant)
1824
2534
3544
45 and older
Education (p = .69, insignificant)
Undergraduate
Graduate
Post-graduate
Gender (p = .401, insignificant)
Male
Female
Marital status (p = .00, significant)
Married
Unmarried
Annual household income (p = .048,
significant)
Up to $8,185 ( 5 lacs)
>$8,185$16,368 ( 510 lacs)
>$16,368$24,552 ( 1015 lacs)
>$24,552$32,741 ( 1520 lacs)
>$32,741 ( 20 lacs)
Time spent=day on Internet (p = .002,
significant)
<1 hour
>14 hours
48 hours
>8 hours
Buying frequency in last 6 months
(p = .312, insignificant)
Up to 3 times
>35 times
>5 times

Technology
mavericks

22%

25%

53%

18.10%
17.00%
47.90%
17.00%

36.50%
9.60%
51.00%
2.90%

37.20%
11.50%
47.30%
4%

10.60%
27.70%
27.70%
34.00%

9.60%
47.10%
23.10%
20.20%

24.00%
40.40%
22.70%
12.90%

7.4%
43.6%
48.9%

1.9%
44.2%
53.8%

5.3%
54.4%
40.3%

67.00%
33.00%

65.40%
34.60%

72.10%
27.90%

70.20%
29.80%

51.90%
48.10%

44.70%
55.30%

35.10%
40.40%
11.70%
5.30%
7.40%

16.30%
36.50%
22.10%
12.50%
12.50%

23.50%
37.60%
20.40%
7.50%
11.10%

16.00%
46.80%
27.70%
9.60%

18.30%
58.70%
11.50%
11.50%

8.40%
46.90%
30.10%
14.60%

10.10%
59.40%
30.40%

9.50%
68.90%
21.60%

4.70%
64.20%
31.10%

sell hard-to-find protein supplements online. It is interesting to note that a

substantial 39.4% of them report clothing and accessories as their highest
purchased product category. Almost 75% of these people belong to the
annual household income group of less than or equal to $16,368 ( 10 lacs).
Though they buy products online, they still value the selection and quality of
products available in the traditional stores (Table 2).This spread fits in well
with people who may, due to their high Internet self-inefficacy levels

34

S. Pandey et al.

TABLE 4 Segment Wise List of Products or Services Bought Online along with the Frequency

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Products=Services
Travel=Hospitality (p = .068, significant
at 10% level)
Bought with least frequency
Bought with medium frequency
Bought with highest frequency
Cinema (p = .488, insignificant)
Bought with least frequency
Bought with medium frequency
Bought with highest frequency
Food (p = .450, insignificant)
Bought with least frequency
Bought with medium frequency
Bought with highest frequency
Health=Beauty (p = .000, significant at 5%
level)
Bought with least frequency
Bought with medium frequency
Bought with highest frequency
Clothes=Accessories (p = .268,
insignificant)
Bought with least frequency
Bought with medium frequency
Bought with highest frequency
Computer=Electronics (p = .002,
significant at 5% level)
Bought with least frequency
Bought with medium frequency
Bought with highest frequency

Relaxed
Offer enthutraditionalists
siasts

Technology
mavericks

79.80%
7.40%
12.80%

66.30%
15.40%
18.30%

71.70%
7.50%
20.80%

66.0%
11.7%
22.3%

58.7%
21.2%
20.1%

59.3%
18.6%
22.1%

81.90%
11.70%
6.40%

83.70%
8.60%
7.70%

82.70%
6.60%
10.70%

81.9%
2.1%
16.0%

91.3%
5.8%
2.9%

88.1%
8.4%
3.5%

45.70%
14.90%
39.40%

54.8%
14.40%
30.80%

48.20%
21.30%
30.50%

62.80%
20.20%
17.00%

68.30%
12.50%
19.20%

47.30%
21.70%
31.00%

(centroid of 1.239) as well as perceived logistical challenges of online buying

(centroid of 0.259), still be attracted to buy from the offline stores.

OFFER ENTHUSIASTS
This segment constitutes 25% of the total online shoppers. This segment has
an average age of 35 years with 36.5% of them being students. They rate
online shopping high on providing good offers in terms of selection, quality,
and availability (positive centroid of 0.363) and have high trust on online
mode on aspects of financial security and privacy (negative centroid of
0.785). They are moderately good Internet users as shown by the low level
of self-inefficacy (negative centroid of 0.166) but find logistical issues pertaining to online returns very high (positive centroid of 0.327). They are educated and well earning with 98% of them being graduate and above and
almost 25% of them belonging to households with annual income of more
than $24,552 ( 15 lacs) per annum. Offers on travel and clothing seem to

Online Shopper Segmentation in India

35

be driving them to purchase online with almost 33.7% of them having a

medium to high frequency of using travel and hospitality-related online
offers. This segment does not enjoy the convenience of Internet shopping
and may only be buying products when they find better quality, selection,
or availability.

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TECHNOLOGY MAVERICKS
This is the largest segment, accounting for about 53% of the online shopper
population. It consists of a younger age group of people with an average age
of 32 years. This segment has consumers who have technology proficiency
and do not have Internet self-inefficacy fears (negative centroid of 0.439)
or logistical concerns (negative centroid of 0.258). However, they do not trust
the online shopping mode in terms of security and privacy and are neutral to
online offers. They are relatively younger, with almost 65% of them belonging to the 18 to 35 year age group and approximately 55% being unmarried.
A significant 24% of them belong to the age group of 1824 years. Other
researchers have also found this age group to be more Internet savvy (Gupta
et al. 2008) with them using Internet for browsing, chatting, acquiring new
information concerned with product attributes, finding retailer information,
and doing store comparisons (Khare et al. 2010). Their findings are corroborated by this study, which also finds a higher Internet self-efficacy level with
almost 14.6% of them spending more than 8 hours per day on the Internet,
thereby making them avid users of technology. However, this study also
reveals that there are people in other age groups as well who belong to this
segment. A significant 72.1% of this segment are males. This goes well with
their purchase pattern of computers and electronics being the most frequently purchased items followed by clothes and accessories. Their technology proficiency level may be influential in their concerns of how
Internet sites can misuse their personal or financial data. Travel and hospitality offers are bought most frequently by a significant 20.8% of them.

IMPLICATIONS AND CONCLUSIONS

The adoption of Internet-based shopping is driven by its utility, both utilitarian
and hedonic, in consumers lifestyles (Khare and Rakesh 2011). The current
study corroborates the same and therefore helps marketers in understanding
shopper segments and developing strategies for the same. Online shopping
is done mainly by the younger age group of 1835 years, but the other age
groups are slowly being driven toward the convenience it offers. Given the
demographic dividend of India, with a low median age of 26 years and a high
rate of Internet adoption in the lower age groups (Gnanasambandam et al.

36

S. Pandey et al.

2012; Technopak 2013), the potential for growth in this sector is tremendous,
though some concerns must be addressed.

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Theoretical and Managerial Implications

The current results show that even though Internet lifestyle dimensions
remain similar across countries, the segmentation of Internet users in India
is relatively different as compared to other countries.
Internet self-inefficacy impacts older customers as is evident in the
matured traditionalists segment. However, interestingly, trust issues are
gradually declining. This segment with older customers may not have transportation access, may be home bound due to their health, or may be homemakers, and therefore convenience may be driving them to shop online. This
can be an apt segment to target provided their Internet self-inefficacy issues
are mitigated by marketers. Marketers, especially those selling health and
beauty products, may work on this target base offering convenience as a
positioning.
Donthu and Garcia (1999) also found that online shoppers are less
bargain-conscious and more concerned with finding products that satisfy
their needs. The offer enthusiasts segment who often take travel- and
clothing-related offers can be developed further by unique offers in terms
of selection and variety of products which may not be available offline.
Given that 36.5% of them are students who may belong to a lower age group,
the offer-seeking trait may be corroborated with the variety seeking behavior
found in Indian youth (Khare et al. 2010). This segment does not really enjoy
the convenience of online shopping, which may be driven by the high logistical issues that they perceive. Therefore, marketers must emphasize the
availability of better and wider selection as well as quality along with easier,
secure shopping experience with clear return and exchange policies to
attract this segment.
The largest segment of technology mavericks remains to be the
younger Internet proficient group who do not have any issues related to
Internet logistics or Internet competency. This is similar to the findings of
the study done by Khare and colleagues (2010), who found Indian students
in the age group of 1824 years to be Internet savvy and having a high
usage level of the Internet. This is a relatively important segment in terms
of size. The penetration of Internet being highest at 48% in the 1824 group
(Subramanian et al. 2013) as well as the Internet-habituated lifestyle of the
younger generation (Technopak 2013; Khare et al. 2010) are pointers to this
segment seeing high adoption levels for online shopping. Therefore, marketers must explore the immense potential of this segment by addressing their
concerns on security. Given the Internet savvy of this segment, they may
use Internet-based targeted marketing and remarketing techniques and provide better offers. They may launch specialty programs which highlight the

Online Shopper Segmentation in India

37

security measures taken by their websites to ensure higher frequency of

purchases by this segment. They may also add more interactive features like
toll-free numbers or help options and online chatting. This is an important
target segment for marketers selling computers, electronics, travel,
hospitality, and clothing products.

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Limitations and Future Research

This study has a number of limitations. While the researchers adapted a lifestyle scale of Western country to the Indian conditions, it is possible that
other unique factors were not captured in the instrument. Further, this study
was limited to only online shoppers in India. Future studies should be done
to understand key characteristics of the larger non-shopper online population in India. This research was based on cross-sectional data which has
limitations, and further longitudinal studies should be done to reveal how
market development in emerging economies is impacting online shopping
behavior. In addition, this study is by-and-large generic in nature and lacks
specificity, which may limit its generalization. Future research can be done
in varied product, consumer, or industry contexts. Also, future segmentation
can add criteria related to website attributes which link to driving online
shopping across each segment. In addition, given the drive toward customer
profitability, this study can be used as a base to assess loyalty levels and drivers for the same across each segment.

CONCLUSION
The online market in India is growing at a rapid pace. As the number of
players continues to grow, competition will become even fiercer, and marketers must delve deep into customer psyche for better segmentation, targeting perspectives, and a stable market share. This study is one of the first in
India to investigate different online shopper segments from an Internet lifestyle perspective. Though it may be considered as an exploratory study, it
presents some interesting findings. The marketers can infuse higher
self-efficacy into the matured traditionalists through simpler and easily
understandable websites and enable them to become more open to Internet
shopping. A suggested way of doing that is using the younger generation in
the household to impact the older generation who are not so Internet-savvy
yet but because of convenience reasons are slowly accepting the idea of buying online. The study found that financial security and privacy is an inhibitor
for online shopping, impacting the technology mavericks more as compared
to the mature traditionalists. It is therefore important for e-marketers to build
consumer confidence by improving on their measures to ensure data confidentiality and security. They must identify new ways to make Internet use

38

S. Pandey et al.

easy and safe. Marketers should continuously monitor customer lifestyle

trends and further understand factors that impact online consumer behavior.
Overall, with the growth of Internet usage in India as well as increasing
experience with using the Internet, there is hope and evidence that people
are becoming more Internet savvy, and in the long run online shopping will
increase.

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