Tasmina Nahid DU Online Shopping

ONLINE SHOPPING IN BANGLADESH: PRESENT SCENARIO AND PROSPECT
A THESIS SUBMITTED TO THE DEPARTMENT OF MARKETING

UNIVERSITY OF DHAKA FOR THE AWARD OF THE DEGREE OF MASTER
OF PHILOSOPHY
BY
TASMINA NAHID
M.Phil FELLOW
DEPARMENT OF MARKETING
UNIVERSITY OF DHAKA
ROLL NO: 253
SESSION: 2011-2012
UNDER THE SUPERVISION

OF
MD. ZAKIR HOSSAIN BHUIYAN Ph.D
PROFESSOR
DEPARTMENT OF MARKETING
UNIVERSITY OF DHAKA
FACULTY OF BUSINESS STUDIES

UNIVERSITY OF DHAKA
BANGLADESH
DECLARATION
I do hereby declare that the thesis entitled “Online Shopping In Bangladesh:

Present Scenario And Prospect” submitted to the department of marketing,
university of Dhaka, Bangladesh, for the degree of Master of Philosophy (M.Phil)
in Marketing is an original and independent research work. No part of this thesis
has been submitted any other university/institution for any other degree or
diploma.
________________
Tasmina Nahid
The Author
Roll no: 253
Session: 2011-2012
Department of Marketing
University of Dhaka
Bangladesh
Date:
CERTIFICATE
I do hereby certify that the thesis entitled “Online Shopping In Bangladesh: Present
Scenario And Prospect” submitted by Tasmina Nahid, Roll no: 253, Session: 2011-
2012, a research fellow of the Department of Marketing, University of Dhaka,
Bangladesh, for the degree of Master of Philosophy (M.Phil) in Marketing has
been done under my supervision and guidance. I recommend its submission for
examination.
SUPERVISOR
_____________________
Md. Zakir Hossain Bhuiyan Ph.D

Professor
University of Dhaka
Date:
ACKNOWLEDGEMENT
I would like to express my gratitude to the most Omnipotent and Omnipresent

Almighty Allah, whose invisible guidance helped me to complete this research
paper.
I would like to thank my instructor Professor Md. Zakir Hossain Bhuiyan Ph.D for
his inspiring guidelines, valuable suggestions, constructive criticism and constant
help throughout the work and in preparation of this paper.
Besides I am also grateful to the authors, researchers and article writers whose
books, reports and journals have helped me to prepare my paper successfully.
I would like to thank to the respondents who participate in my study to provide
data by consuming their valuable time and effort.
Finally, I would like to take the opportunity to express my wholehearted gratitude
to my mother, family members, fellow friends, near and dear ones, colleague who
offered encouragement, information, inspiration and assistance during the course
of constructing this paper.
I thank them all from the core of my heart.
______________
Tasmina Nahid
Reg no: 253
Session: 2011-2012
University of Dhaka
Date:
TABLE OF CONTENTS
TITLE NO CONTENTS PAGE NO

Abstract i
List of Figures, Tables and Charts iii
1.0 Introduction 1
2.0 Literature Review 3
3.0 Objectives of the Research 6
4.0 Model Development 7
4.1 Research Framework 7
4.2 Conceptual Model 8
4.3 Analytical Model 9
5.0 Research Design 11
5.1 Nature of the Study 11
5.2 Study Area 11
5.3 Instrument 11
5.4 Sample Size 11
5.5 Data Collection 12

5.6 Measurement and Scaling 12
6.0 Data Analysis Planning 13
6.1 Regression Analysis 13
6.2 Factor Analysis 13
6.3 Cluster Analysis 13
7.0 Findings 14
7.1 The Emergence of Online Shopping 14
7.2 How Online Shopping System Works 14
7.3 Present Internet and Online Shopping Condition in 15
Bangladesh
7.4 Types of Online Shops Operated In Bangladesh 19
7.5 Payment System of Online Shopping 21
7.6 Benefits of Using Online Shopping System 21
7.7 Prospects of Using Online Shopping System in 22
Bangladesh
7.8 Problems of Online Shopping System in Bangladesh 23

Data Analysis (To Assess Demand, Growth, and Users’
8.0 Position of Online Shopping) 25
8.1 Multiple Regression Analysis 25

8.2 Factor Analysis 30
8.3 Cluster Analysis 40
8.4 Reasons behind Not Purchasing From Online Shops 42
9.0 Recommendations 43
10.0 Conclusion 45
11.0 References 46
12.0 Appendices 51
Appendix 1 Questionnaire 51
Appendix 2 Regression Analysis 54
Appendix 3 Cluster Analysis 55
Appendix 4 Main Reason behind Not Purchasing From 59
Online Shopping Sites
ABSTRACT
The limitations in shopping at brick and mortar retail stores forces consumer to
look for alternative ways to get what they need in a convenient, safe, affordable,
and time saving manner. Online shopping seems to be one of the most convenient
ways to compare products and services. It is the process or system that provides a
secured environment for browsing, comparing and selecting from a wide variety of
products and services using the Internet. The merchants provide both products and
services through the online by themselves in a safe environment. This type of
marketing creates growth for expanding the local products and services in
Bangladesh, encourages new entrepreneurs and gives customers an opportunity to
choose products from all over the world. At present online shopping system is
becoming an inherent part of many people’s daily life in Bangladesh. So to have a
clear idea about the present status of online shopping system in the perspective of
Bangladesh, it is an urgent need to take depth research in the area. This will lead to
the identification of the actions to be suggested and thereby highlighting the
prospects of this system as a whole.
The study is descriptive and analytical in nature. For gathering primary data the
survey method and a structured questionnaire have been used. Sample consists of
one hundred respondents. Simple random sampling method is used in this study.
The number of questions is 15. The questionnaire includes 9-point Likert scale
ranging from 1 (Extremely Disagree) to 9 (Extremely Agree). To analyze collected
data from respondents, three methods have been used such as multiple regression
analysis, factor analysis and cluster analysis. The multiple regression analysis of
the survey data reveals the demand and growth of online shopping has value 2.661.
It means that online shopping system has good demand and growth. Two factors
are found by factor analysis. Those two factors labeled as “personal factors” and
i
“online shop related factors”. On the other hand, two clusters have been found by
cluster analysis. Each cluster is described on the basis of the centroids by assigning
it a name or label. First cluster or group is labeled as “prosperous” and fit in to
upper class citizen. The second cluster is labeled as “economical” as the
respondents of this group want to cost less for quality products and services.
Bangladesh has slow pace of development in telecommunication and Internet

technologies. Except the major cities, the benefits of these technology
advancements are not dispersed in the same way all over the country. Internet
access is limited to specific regions and specific segments of the society. In spite
of all these conditions, online shopping in Bangladesh is becoming more
popular day by day. Because of proliferated use of handheld and wearable devices
at present the reach of Internet seems rapid. In future it may not be quite
impossible that the traditional shopping system would be less popular than
online shopping.
ii
LIST OF FIGURES, TABLES AND CHARTS
TITLE NO FIGURES PAGE NO

Figure 1 Research Framework 7
Figure 2 Conceptual Model 8
TABLES
Table 1 Population, Internet Usages, Rate of Penetration and Per
Capita GDP in US Dollars in Bangladesh 16
Table 2 Model Summary 25

Table 3 ANOVA 26
Table 4 Regression Analysis 28
Table 5 KMO and Bartlett's Test 30
Table 6 Correlation Matrix 32
Table 7 Total Variance Explained 33
Table 8 Factor Matrix (Unrotated) 35
Table 9 Rotated Factor Matrix 35
Table 10 Factor Matrix Before and After Rotation 36
Table 11 Factor Score Coefficient Matrix 37
Table 12 Reproduced Correlations 38
CHARTS
Chart 1 Steps of Online Shopping System 15
Chart 2 Online Shopping Sites Operated in Bangladesh. 18
Chart 3 Reasons behind Not Purchasing From Online Shop 41
Table 13 Cluster Centroids 42
iii
Online Shopping in Bangladesh: Present Scenario and Prospect
1.0 Introduction
In the last decade, there has been a remarkable change in the way consumers have
altered their technique of shopping. Now apart from the old traditional methods
buying and selling can be done with the help of modern technology-based methods
such as online shopping. Online shopping is a process whereby customers directly buy
goods or services from a seller in real time, without an intermediary service, over the
Internet (Trees and Stewart, 2000). It refers to the shopping behavior of consumer in
an online store or a website used for online purchasing purpose (Monsuwe, et al.,
2004). It is the process of conducting buying and selling activities of goods and
services from merchants through using the modern technical devices such as Internet,
mobile, credit and debit cards, etc. It is a form of electronic commerce which allows
consumers all over the world to directly buy goods or services from a seller over the
Internet using a web browser. Alternative names of online shopping are e-web-store,
e-shop, e-store, Internet shop, web-shop, web-store, online store, and virtual store.
People can buy and sell anything from anywhere in this world through online
shopping sites. This type of shopping started in the early days of the Internet only
allowing simple B2B transaction. It is now a very common shopping system in the
developed countries and one of the most widely used words in the business world.
Although consumers continue to purchase from a physical store, they feel very
convenient to shop online since it frees them from personally visiting the store. Online
shopping helps the consumers to find out sellers all over the world, learn about their
offers, initiate purchase, and give feedback. This shopping system makes it easier to
communicate with companies. Many companies have started using online shopping
system with the intention of cutting marketing costs, thereby reducing the price of
their products and services to stay forward in extremely competitive markets.
Companies use this system to exchange, communicate, and publicize information to
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Dhaka University Institutional Repository
sell the product, to take feedback, and also to carry out satisfaction surveys with the
customers. The popularity of online shopping has been greater than before due to the
easy access of web and explosion of technology among customers of new generations.
According to the Internetlivestats.com, 40.4% of the overall population of this world
is using Internet till July, 2014. In 2013, the percentage was 37.9% [43]. So, it has
been clear that the number of Internet users is increasing day by day.
The Internet users are the ultimate target customers for the online shops. As a
developing country, Bangladesh has not been left behind in the Internet use.
According to the Bangladesh Telecommunication Regulatory Commission (BTRC),
the Internet users in Bangladesh are 40832.387 thousand subscribers in August, 2014
[44]. Unquestionably Bangladesh has a massive target customer for online business.
Whenever a great number of target customers are available, the potential business
starts to emerge. That is how the emergence of e-commerce was visible in the early
2000. In the beginning of the online shopping in Bangladesh, payment issue was a big
hindrance for the consumers to shop online. The only convincing and dependable
choice was Cash-on-delivery option. In December, 2012, Bangladesh Bank launched
National Payment Switch Bangladesh (NPSB) which brought every bank into a
common platform for payment systems [45]. Now the consumers who are shopping
online or getting involved in any kind of online transaction can use their debit or
credit card. At present the online transaction situation has been improved in
Bangladesh. Online shopping would get more attention in Bangladesh from customers
because purchasing from Internet gives many benefits to customers such as shopping
from their place, reduction of cost of transportation, wide variety of choices, and so on
(Masoom, et al., 2013). Various categories of products such as grocery and
vegetables, fish and meat, bakery and sweets, gifts, cloths, etc, are available to buy
from a business to consumer website called online store. Most of the products have
been introduced with brand names. Currently more than one hundred websites are
running business to sell products online and organize home delivery in Dhaka city and
some selected district headquarters in Bangladesh. There is no possibility that the
expansion of online shopping will drop off.
2
2.0 Literature Review
Online shopping is a way of shopping where the buyer can order a product or service
by using Internet. (Suhan., 2015). Online shopping is also called E-commerce. It
means running the whole process of business electronically using the Internet
(Chaffey, et al., 2006). It was invented in the UK by Michael Aldrich in 1979.
(Mohiuddin., 2014).
In order to shop online the consumer must be relatively familiar with computer and
how to navigate the Internet. (kim and Ammeter, 2008). It is a process where
customers go through when they decide to purchase via the Internet. In order to ensure
the achievement of e-commerce, it is significant to establish customer needs and
wants (Chaffey, et al., 2006). It has developed to a multibillion dollar business today.
Today’s consumers are finding it easier to communicate with companies through
Internet. Consumers can search out sellers on the web, learn about their offers, initiate
purchases, and give feedback (Kotler and Armstrong, 2011). Online shopping made
the world a global village, without any limitation of boundary. This shopping system
benefitted the sellers by reducing the cost of physical display, sales representatives,
etc., and simplified the comparison process of consumers (Maverick Williams, 2011).
Jeffrey F. Rayport (2001) showed how the companies with PC-based information
system can manage their business process. Bob Norton and Cathy Smith (2004)
Highlighted several reasons of rapid increasing trends of web buying and selling.
Kenneth C. Laudon (2004) focused how consumers take online purchasing decision.
He also showed that the online purchase decision is different from offline purchase
decision. Ferdousi (2003) has explored the e-commerce situation in Bangladesh,
identified the problems, and provided some suggestions to overcome the problem.
Islam and Alam (2006) identified some critical success factors that affect consumers’
attitude toward M-commerce. Ishtiaque (2004) showed the status of E-commerce
industries in Bangladesh and provided some recommendations to implement
technology oriented facilities in the e-commerce sector of Bangladesh. Morshed
3
(2005) presented a conceptual framework for transferring M-marketing application in
the context of Bangladesh.
Different influential factors have significant effect on online shopping (Shergill and
Chen, 2005). Web site design of a web page is one of the most important factors that
influence online shopping (Imrana and Humaira, 2010). The research by Shergill and
Chen (2005) in their empirical study identified four factors, i.e., website design,
reliability, customer service, and security/privacy for online shopping.
Young are the main buyers who buy products through online (Imrana and Humaira,
2010). Dholakia and Uusitalo (2002) examined the relationship between age and
Internet shopping and found that the younger consumers are more inclined to the
online shopping. They search for more products online, and they were more likely to
agree that online shopping is more convenient.
Little study has been done in Bangladesh on the topic of online shopping. Suhan
(2015) investigated the acceptance of online shopping in Bangladesh from consumer’s
perspective and offered the present scenarios and behaviors among the Internet users
of Bangladesh. Chowdhury and Hossain (2013) proposed a model derived from
Technology Acceptance Model (TAM) to explain consumer acceptance of e-shopping
in Bangladesh. Islam et al., (2012) investigated how customers can judge the trust
carrying attributes when shopping from particular online shopping website. They have
found credibility and look unique affect online shoppers’ perception of trust in online
shopping system. Howlader et al., (2012) showed that online purchase intention and
its continuity depend on the attitude of the customer that is ultimately influenced by
trust or belief on online shopping, subjective norms that depend on social and media
role, control variables, and some support facilities. Imrana and Humaira (2010)
detected the underlying causes of online purchasing and evaluated consumers’
satisfaction and dissatisfaction level considering their positive or negative experiences
on online purchase. Kamrul, et al., (2010) shows the relationship between online
marketing exercise and the area of business operation (international vs. domestic) and
provided an idea why marketers use Internet in the country. They concluded with the
4
prime exercise of online marketing which is centralizing mostly for leveraging
international business operations in Bangladesh. Karim (2013) tried to understand
customer satisfaction in online shopping and investigated the major reasons that
motivate customers’ decision-making processes as well as inhibitions of online
shopping. Kabirul (2012) examined important features of a number of goods and
service providing electronic commerce websites (business to consumer category) in
Bangladesh. The prices of a range of products of online and those of traditional stores
in Dhaka city were also compared. Suhan (2015) explored the acceptance of online
shopping in Bangladesh from consumer’s perspective and presented scenarios and
behaviors among the Internet users of Bangladesh.
5
3.0. Objectives of the Research
The research objectives are-
1. to know the emergence of online shopping,

2. to know how online shopping works,
3. to investigate the prospects of online shopping system in Bangladesh,
4. to find out the drawbacks of this system and suggest in measures for bringing
efficiencies in the context of Bangladesh, and
5. to assess demand, growth, and users’ position of Internet and online shopping.
6
4.0 Model Development
4.1 Research Framework
Figure 1: Research Framework
Research on
online shopping
Literature review
Secondary data Selection of
variables
Questionnaire
preparation
Conduct survey Primary data

through field work
Data analysis
Report
preparation
7
4.2 Conceptual Model
The demand and growth of online shopping system depend on customers’ age,
income, frequency of visit, product quality, service quality, price, service
availability, design of website, after sales service, and so on.
Figure 2: Conceptual Model
Independent Variables
Age
Income
Frequency of
Dependent Variable
visit
Service Quality
Visit
Demand and
growth of online
Product Quality
shopping
Price
Product
availability
Website design
Atmosphere
After sales
service
8
4.3 Analytical Model
The principal analytical tool is linear regression model which is commonly known as the
multiple regression model. The model is-
Y= βo+ β₁X₁+ β₂X₂+ β₃X₃+ β₄X₄+ β₅X₅+ β6X6+ β7X7+ β8X8+ β9X9+ e
Y = Demand and growth of online shopping
β0 = Constant (intercept of the variable)
β1 = Coefficient of age
X1 = Importance of age
β2 = Coefficient of income
X2 = Importance of income
β3 = Coefficient of frequency of visit
X3 = Importance of frequency of visit
β4 = Coefficient of service quality
X4 = Importance of service quality
β5 = Coefficient of product quality
X5 = Importance of product quality
β6 = Coefficient of price
X6 = Importance of price
β7 = Coefficient of service availability
X7 = Importance of service availability
β8 = Coefficient of website design
X8 = Importance of website design
β9 = Coefficient of after sales service

9
X9 = Importance of after sales service
e = Error
The above model is estimated based on the model given below-
Ŷ= a+b₁x₁+b₂x₂+b₃x₃+b₄x₄+b₅x₅+b6x6+ b7x7+ b8x8+ b9x9
10
5.0 Research Design/Methodology
The components of research design are described briefly as below:
5.1 Nature of the Study
The nature of the research is basically descriptive research. Descriptive study requires
direct interview and massive exploration of secondary sources. According to Naresh
K. Malhotra (2010), descriptive research is usually a type of conclusive research,
which has its major objective of describing something. Theoretical part of the research
has significantly used secondary sources such as review of journals and reading
materials, while the quantitative findings and interpretations depended on primary
data. A survey has been conducted, where information obtained from the sample only
once. Thus, the study can be termed as descriptive and analytical.
5.2 Study Area
Currently nonresident affluent Bangladeshi people, rich resident consumers’,

professionals who regularly use Internet, educated people, and students are the main
customers of online shopping in Bangladesh. As it is descriptive in nature, different areas
of the Dhaka city have been identified for convenience.
5.3 Instrument
To collect data from the respondents, a structured questionnaire has been used. The
questions are easy to understand. The number of questions is 15. Average interviewing
time was around 10 minutes.
5.4 Sample Size
To highlight the true overall scenario, sample sizes of 100 respondents are chosen for
the survey. Both male and female respondents are included in this study. The young are
the main buyers who buy products through online. The younger consumers searched
11
for more products online, and they are more likely to agree that online shopping is
more convenient (Imrana and Humaira, 2010). That is why younger age group of
Dhaka city has been considered. A single cross sectional study has been chosen. While
selecting the respondents’ knowledge, awareness, and experience in relation to online
shopping have been emphasized.
5.5 Data Collection
Both secondary and primary data have been collected for conducting the research. For
the proposed research secondary data have been collected from Internet, texts, journals,
news papers and research papers from home and abroad. Primary data has been
collected from different consumers surrounding Dhaka city.
5.6 Measurement and Scaling
The questionnaire for the respondents uses 9-point Likert scale ranging from 1
(Extremely Disagree) to 9 (Extremely Agree) to obtain their opinion. The main reason
for using Likert scale is that it is relatively easy to understand and construct. Nominal
scale is used to know the occupation of the respondents.
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6.0 Data Analysis Planning
To analyze the collected data from the respondents, mainly three methods have been
followed. They are multiple regression analysis, factor analysis, and cluster analysis.
These analysis models have used to determine the relationship of demand and growth
of online shopping with other variables like age, income, frequency of visit, product
quality, service quality, design of website, price, availability of service, and Internet
access.
6.1 Regression Analysis
Multiple linear regression is an extension of the linear regression, where more than
two variables are involved. Multiple regression analysis technique develops
mathematical relationship between one dependent variable and two or more
independent variables.
6.2 Factor Analysis
Factor analysis is a class of procedures primarily used for data reduction and
summarization. Relationships among a sets of many interrelated variables are
examined and represented in terms of a few underlying factors. Factor analysis is
done by independent variables.
6.3 Cluster Analysis
Cluster analysis is a class of techniques used to classify objects or cases in

relatively homogeneous groups called clusters. Cluster analysis is used to identify
homogeneous customer groups to segment the market based on customers’
attitudes and behavior.
Statistical software SPSS is used to process the collected data.
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7.0 Findings
7.1 The emergence of online shopping
English entrepreneur Michael Aldrich invented online shopping in 1979. His system
connected a modified domestic TV to a real-time transaction processing computer via
a domestic telephone line [46]. Tim Berners-Lee created the first World Wide Web
server and browser in 1990. It was opened for commercial use in 1991 (M. Aldrich,
2011). In 1994 Pizza Hut opened an online pizza shop, Netscape's SSL v2 encryption
standard for securing data transfer and Intershop's first online shopping system.
Amazon.com launched its online shopping site in 1995, and eBay was also introduced
in 1995. [46]. In 1998 Paypal starts the first mode of paying online. Yahoo and
Zappos.com, the first only online store was launched. In 1999 onwards sudden
increase is created with google.com and social networking sites like face book, twitter,
etc.
7.2 How online shopping system works
Online shopping is performed through Internet and is limited to Internet users only.
This system is very easy to use. Sites usually have comprehensive information
about a product like pictures, prices, and descriptions. Some sites give more details
than traditional shops. When consumers decide to buy a product, they can visit
different websites to compare products. After comparing the price, quality, and
other related information, they choose an item by clicking and adding it to a cart.
After reviewing the cart they proceed to check out with desired delivery address
and a payment option. Most online shops require the consumers to register before a
purchase is made, and they may also require the consumers to be the members of
their site before any transaction is processed. Persons without credit or debit cards
can also pay their bills via online banking system. The subsequent chart shows
how online shopping system works.
14
Sellers categorize their products into different departments with picture, price,
and relevant information and place them in website.
Customers choose products from different categories and add them into
viewer’s basket or cart.
When the customers have finished, the site automatically turns the contents of
the cart or basket into an order.
Customers select the delivery area and enter their address.
Customers login or register to pay bill by credit, debit, or any other card or system
supported by online shopping.
Sellers deliver the product to the address entered by the customer
Chart 1: Steps of online shopping system
7.3 Present Internet and online shopping condition in Bangladesh
Online shopping is largely dependent on the Internet and the access, pricing, and the
quality of Internet services, and Internet services are significantly dependent on the
status and performance of the telecommunications sector (Mohiuddin, 2014). In the
last few years the rates of penetration and Internet user in Bangladesh have increased
significantly. If Internet is used such great numbers, obviously online shopping is not
far behind. The following table shows the population, Internet usages, rate of
penetration, and per capita GDP in US dollars in Bangladesh.
15
Table: 1 Population, Internet Usages, Rate of Penetration, And Per Capita
GDP in US Dollars in Bangladesh
Population Users % of GDP

Year
Penetration
2007 137,493,990 450,000 0.3 % US$ 466
2009 156,050,883 556,000 0.4 % US$ 574
2010 158,065,841 617,300 0.4 % US$ 624
2011 158,570,535 5,501,609 3.5 % US$ 700
2012 161,083,804 8,054,190 5.0 % US$ 700
2015 168,957,745 53,941,000 31.9 % US$ 1,080
Source: ITU and International Monetary Fund
Compared to other countries of the world, online shopping came at a later stage in
Bangladesh, but it grew very quickly. From May 22, 2006 Bangladesh is connected
with the submarine cable (Parvin, et al., 2007). But the long awaited connectivity with
international submarine cable has done little to improve the quality of Internet services
in the city forcing the city dwellers to depend on primitive and slow modem
connections (Parvin, et al., 2007). Though Internet in Bangladesh has grown rapidly in
the last few years, still the access to the Internet is very limited for several system
reasons, poor electricity network, affordability of computer, and Internet use and
knowledge about the Internet (Parvin, et al., 2007). In the context of Internet
availability and infrastructure, Bangladesh was ranked 73 in the world (Kirkman, et
al., 2002). Meanwhile, Bangladesh is progressing in developing the Internet and
information communication technology. Bangladesh already has trained IT
professionals, and the number of IT users in this country is increasing rapidly.
(Laisuzzaman, et al., 2010).
In recent times Bangladesh government has approved 3G technology in Internet. It has

created a new era in the field of online shopping. Bangladesh government is strong-
16
minded to make digital Bangladesh where every person will use Internet for their
everyday work. Now this reflection of the Bangladesh government will facilitate the
online marketer a lot to increase their business. Recently lots of online shopping
websites have been developed in Bangladesh. Online commerce is also increasing step
by step. The size of the domestic market has been estimated to be more than Tk. 300
core in a year (BASIS, 2007). In just three years, more than 2000 online trading
platforms have made its way to Bangladesh [6]. Including e-ticket sales and sales on
facebook the market has yearly transactions around Tk. 10 billion (Lee, 2000).
Furthermore, it increases at a tremendous pace with a monthly growth of 20 to 25
percent according to data from BASIS disclosed to financial express, the leading
financial newspaper in Bangladesh [6]. Every year 1.5 to 2 million people shop online
and the market is growing by 15% to 20%. [47]. One of the most popular online
shopping portals Cellbazar originally launched their service in 2006 as ‘Cellbazaar’
with innovative SMS service. They have been operating e-commerce website since
2007. This website has been rebranded as ekhanei.com [48]. Swedish e-commerce
company Bikroy.com is doing well in Bangladesh. Since their launch in 2012,
Bikroy.com has experienced a significant growth and is today the largest online
marketplace in Bangladesh [6]. The subsequent chart comprises online shopping sites
operated in our country.
1. aarong.com 60. hotofferbd.com

2. adhunastore.com 61. itbazar24.com
3. amarpc.com 62. itsme.com.bd
4. alohaishoppe.com.bd 63. iferi.com
5. ajkershop.com 64. oo.com.bd
6. apnardeal.com 65. getstyle24.com
7. anondomart.com 66. jamdaniville.com
8. aponbill.com 67. jamdanimela.com
9. aponzone.com 68. kangaroosworld.com
10. apshora.com 69. jemonkhusi.com
11. atpohor.com 70. kanvasbd.com
12. aurthifashion.com 71. karigor.com
13. bajpakhi.com 72. loftybuy.com
14. barirbazar.com 73. LAVELUX.com
15. bdebazaar.com 74. littleangelsbd.com
16. bdbargain.com 75. megabuy.com.bd
17
17. bdshop.com 76. mohanogor.com
18. betikrom.com 77. monihari.com
19. biznesstrackerbd.com 78. nettoponno.com
20. branoo.com 79. nanarokom.com
21. brandbanglaeshop.com 80. nokshactg.com
22. buymebrand.com.bd 81. officerjonno.com
23. bagdoom.com 82. ojonika.com
24. bdhat.com 83. onnokichhu.com
25. bdhaat.com 84. pepbis.com
26. biponee.com 85. poplin.com.bd
27. bangladeshbrands.com 86. proyjon.com
28. bdcost.com 87. priyoshop.com
29. beautyshopbd.com 88. lerevecraze.com
30. chaldal.com 89. rightchoicebd.com
31. ghoori.com.bd 90. ronginbari.com
32. goponekinun.com 91. rang-bd.com
33. goponjiniah.com 92. rokomari.com
34. change15.com 93. sherpurbazar.com
35. e-jagat.com 94. shopybuzz.com
36. ctgshop.com 95. smartbdshop.com
37. coxsbazareshop.com 96. satkhirashop.com
38. daraz.com.bd 97. shopping24bd.com
39. dhakamela.com 98. stylex5.com
40. diabetesstore.com.bd 99. shapebd.com
41. diamondworldltd.com 100. Daraz.com.bd
42. digimall.com.bd 101. ajkerdeal.co
43. doctorola.com 102. Shoibal.com
44. dinratri.com 103. kaymu.com.bd
45. directfreshbd.com 104. shoppersbd.com
46. ekroybd.com 105. bikroy.com
47. ehatbd.com 106. ekhanei.com
48. emelabd.net 107. clickbd.com
49. esmartfashion.com
50. esufiana.com
51. exclusivebd.com
52. esho.com
53. fashionfolder.com.bd
54. fkcraft.com
55. freshfoodbd.com
56. fhore.com
57. fortunabangladesh.com
58. gd.com.bd
59. hotofferbd.com
18
Chart: 2 Online shopping sites operated in Bangladesh
7.4 Types of online shops operated in Bangladesh
Online websites can be classified into the following six retail models:
 Manufacturer sites: Manufacturer sites are sites where manufacturers directly

sell their products to customers via online, skipping wholesalers and retailers,
such as Sony. Com, compact.com.
 Off-line sites: Sites where physical stores make their retail products available
on the online, such as bestbuy.com, walmart.com.
 Catalog hybrid sites: Sites that put their printed catalog on the online, such as
fingerhut.com, columbiahouse.com.
 Pure.com: Sites that buy products from manufacturers at wholesale and sell
them online at retail without owning physical and public sorters, such as
Amazon.com, etoys.com etc.
 Mall sites: Sites that develop a location on the online and make money by
charging retailers fees, such as shopping yahoo.com, mysimon.com.
 Brokerage sites: Brokerage sites unite buyers and sellers on the online and
charge a portion of transaction for the service, such as eBay.com.
In Bangladesh mainly three types of online shops that are available:
19
 Manufacturer sites: By using this system manufacturers directly sell their
products to customers via online, skipping wholesalers and retailers. For
example, “Fresh”, a brand name of consumer goods from Meghna Group of
Industries in Bangladesh, offers a complete range of full cream milk products,
wheat flour, wheat moida, wheat semolina (suji), refined soyabean oil, vacuum
salt, spice powder, mix spice, lentil, natural drinking water, refined sugar, and
tea. Recently they have launched their online shop “FRESH Online Store – e-
Freshstore.com”.
 Off-line sites: Offline retailer sites in which physical stores make their retail
products available on the online, such as aarong.com.
20
 Brokerage sites: Brokerage sites that unite buyers and sellers on the online.
This type of online shopping centre is mainly serving as a media for buyers and
sellers. People can buy or sell their used and unused commodities from this
center. The transaction procedure is very simple. Sellers post the picture and
related information. Buyers choose from the posted products and contact with
the setter, bargain with the seller to set a purchase price, and buy it. Such as
Bikroy.com, ekhanei.com.
7.5 Payment system of online shopping
At present most of the Bangladeshi online shoppers generally use their debit or credit
card to make payments. Cash on delivery (CoD) is also a popular method of paying
online bills. However some systems enable users to credit accounts and pay by
alternative means, such as bKash, DBBL and BRAC bank banking, mobile banking,
pay pal, western union, claque, postal money order.
7.6 Benefits of using online shopping system
Companies can take extra advantages by using online shopping. It helps a company
in market segmentation and audience sizing, reduces cost to global reach, quick
21
adjustments to market conditions, increase demand, decrease of promotion and
sales cost, building strong customer relationship, etc. It also helps a company to
satisfy its customers by giving customized product and service. On the other hand
customers can be beneficial by using online shopping by way of getting their
desired products at any time, convenience hassle free purchase, wider choice
option, getting more information, etc.
7.7 Prospects of using online shopping system in Bangladesh
When people want to buy from online shops most of them prefer substance over
style and function over flash. Therefore, effective online shopping sites should
contain useful information; interactive tools that help buyers find and evaluate
products of interest, links to other related sites, changing promotional offers, and
enjoyable features that lend relevant pleasure. Some common ideas for future
prospects to online shopping are the following:
 The revolution of information in this country is in full swing. Gradually the

people of Bangladesh are becoming more interested about new technologies
as well as online shopping. The positive attitude toward this system by both
the government and private sectors has encouraged the rapid growth of
online shopping in Bangladesh.
 Now Bangladeshi entrepreneurs are more concerned about their business
growth. They want to extend their business throughout the world. Online
shopping system came to them as an enormous opportunity. Many
Bangladeshi companies especially individual designer dress houses, textiles,
and garments are in progress to open their online shopping sites. This will
result in a huge revenue inflow.
22
 Many public and private banks have started to change their traditional old
and conservative network infrastructure. BRAC bank is the revolutionary
bank that has opened the door of online shopping on behalf of its client on
December 10, 2010[49]. Other private banks are also trying to improve the
inter-bank and intra-bank connectivity, security of transaction, and the idea
of online buying and selling day by day.
 The government of Bangladesh is playing a major role in the rapid growth
of online shopping system. Now Internet service is available in major
district headquarters, but BTTB to roll out it up to the 64 district head
quarters. Now almost 40 plus districts are getting Internet facilities. All
these activities by Bangladeshi government show a huge prospect of online
shopping all over the country.
 Ministry of science and information and communication technology (ICT)
and Access to Information (A2I) project of the Prime Minister’s office has
arranged a digital innovation fair from 6-9 July, 2011 in Dhaka. The website
named amar desh amar gram [50] got the national digital innovation award
managed by a non government organization, titled development research
network (d. Net). This site won this award by giving customers the facilities
of shopping over online. [47]
7.8 Problems of online shopping system in Bangladesh
Being a developing country in the third world region there are some substantial
problems, which are big hurdles for intensifying online shopping in Bangladesh.
The problems explored here are as follows-
 Many people in Bangladesh, especially in the rural area, are not aware of
online shopping system. Even some upper class people are also not aware of
it.
23
 Our telephone speed is slow. Broadband line is costly for individual user,
and the services are not up to the mark till now.
 A small number of people use credit, debit, and smart card which are very
crucial for completing online shopping payment system.
 Many people have fear of fraudulence of online shopping sites. They have
less faith on online shopping site products’ quality.
 Several online shops charge higher prices than brick and mortar shops.
 Many well known brands and companies do not have any online shopping
sites. Therefore, people, who prefer branded products, do not use online
shopping system.
 In our country, people enjoy shopping as an amusement. Therefore, they
prefer to visit different shops visually rather than virtually.
 Online shopping system saves time, but if the customers do not use card
system then it takes more time to get a desired product in hand. As a result,
many people prefer traditional shopping system over online shopping
system.
 Our power supply is poor and fails frequently.
 Our people have little affordability of online shopping components such as
Internet affordability, computing devices’ affordability, and handheld devices
affordability. These control its reach up to affluent class of the society.
 Consumers show a bias behavior toward brands that they know well and have a
good experience of in the past. Therefore, the branded products score over the
non branded or less popular branded online products.
24
8.0 Data Analysis (To Assess Demand, Growth, and Users’ Position of
Online Shopping)
8.1 Multiple Regression Analysis

Multiple regression means models with just one dependent and two or more
independent variables. The variable whose value is to be predicted is known as the
dependent variable, and the ones whose known values are used for prediction are
known as independent variables [51]. Multiple regression analysis mainly focuses on
Model Summary, ANOVA, and coefficient. These models are interpreted as below:
Table 2: Model Summaryb
Adjusted R Std. Error of the

Model R R Square Square Estimate
1 .715a .511 .365 .90038
a. Predictors: (Constant), Age of Respondent, monthly income of respondent, frequency of
online shop visit in a month, satisfaction about service quality, online shops provide good
quality product, online shops charges reasonable price, products are always available, liking of
webpage design of online shops, satisfaction about online shops after sales service facility
b. Dependent Variable: Demand and growth of online shopping.
Interpretation:
R represents the multiple correlation among the variables specified. According to
Table 2, R= 0.715. It means high degree of correlation among the variables.
A common goodness of fit check is R², which refers to the fraction of variance
explained by the model, with results ranging between 0 to 1; the higher the value, the
better the linear regression fits the data. According to Table 2, R² = 0.511 measures
the proportion of variation in dependent variable that is explained by the independent
variables. In this case, 51.1% variance in dependent variable (Demand and growth of
online shopping) is explained by independent variables (Age, monthly income,
25
frequency of online shop visit in a month, satisfaction about service quality, online
shops provide good quality product, online shops charges reasonable price, products
are always available, liking of webpage design of online shops, satisfaction about
online shops after sales service facility).
This is an overall measure of the strength of association and does not reflect the extent
to which any particular independent variable is associated with the dependent variable.
Table 3: ANOVAb
Model Sum of Squares df Mean Square F Sig.

1 Regression 25.454 9 2.828 3.489 .005a
Residual 24.321 30 .811
Total 49.775 39
a. Predictors: (Constant), Age of Respondent, monthly income of respondent, frequency of online
shop visit in a month, satisfaction about service quality, online shops provide good quality product,
online shops charges reasonable price, products are always available, liking of webpage design of
online shops, satisfaction about online shops after sales service facility
b. Dependent Variable: Demand and growth of online shopping
In this research, the hypotheses of multiple regression analysis are as below:
Ho: R² = 0 or
H₀: β₁=β₂=β₃=β₄=β₅= β6=β7=β8=β9=0
H₁: β₁≠β₂≠β₃≠β₄≠β₅≠β6≠β7≠β8≠β9≠0
H1: Age of respondent is positively related to demand and growth of online shopping.
H2: Monthly income of Respondent is positively related to demand and growth of
online shopping.
H3: Frequency of online shop visit in a month is positively related to demand and
growth of online shopping.
H4: Satisfaction about service quality is positively related to demand and growth of
online shopping.
26
H5: Good quality product is positively related to demand and growth of online
shopping.
H6: Reasonable price is positively related to demand and growth of online shopping.
H7: Service availability is positively related to demand and growth of online
shopping.
H8: Web page design is positively related to demand and growth of online shopping.
H9: After sales service facility is positively related to demand and growth of online
shopping.
Interpretation
According to Table 3, the value of F is 3.489, which is significant with 9 and 30
degrees of freedom at α = 0.05. The value in significance column is 0.005 which
indicates the statistical significance of the regression model. According to table 3, the
value is 0.005 which is less than 0.05. It indicates that the model applied is
significantly good enough in predicting the outcome variable.
Here, the Null hypothesis is rejected.
27
Table 4: Regression Analysis
Coefficientsa
Standard-
ized
Unstandardized Coefficient Collinearity
Coefficients s Statistics
Std.
Model B Error Beta t Sig. Tolerance VIF
1 (Constant) 2.057 1.244 1.653 .109

Age of Respondent .066 .148 .084 .450 .656 .465 2.149
Monthly income of
.007 .172 .008 .038 .970 .365 2.742
Respondent
Frequency of online shops
-.119 .299 -.079 -.399 .693 .415 2.408
visit in a month
Satisfaction about service
.533 .185 .496 2.885 .007 .552 1.811
quality
Online shops provide good
.029 .180 .028 .162 .873 .535 1.870
quality product
Online shops charge
-.066 .086 -.104 -.764 .451 .886 1.128
reasonable price
products are always
.241 .137 .289 1.761 .088 .606 1.650
available
Liking of online shops
.131 .142 .143 .925 .362 .679 1.472
web page design
Satisfaction about online
-.218 .104 -.339 -2.098 .044 .624 1.602
shops after sales service
a. Dependent Variable: demand and growth of online shopping
Interpretation:
According to Table 4 the estimated model can be illustrated as follows:
Ŷ (Demand and Growth of Online shopping) = 2.057 + 0.066 (age) + 0.007

(income) - 0.119 (Frequency) + 0.533 (service quality) + 0.029 (product quality) -
0.066 (price) + 0.241 (service availability) + 0.131 (web page design) - 0.218 (after
sales service).
28
On the basis of this model demand and growth of online shopping shows value 2.661.
It means that online shopping system has good demand and growth. Frequency of
online shop visits, price and after sales service shows negative correlation with
demand and growth of online shopping. The higher the values of those variables, the
poorer the demand and growth of online shopping system and vis-a-vis.
29
8.2 Factor Analysis
To conduct factor analysis, some steps from problem formulation to determining
model fit were followed. The steps are explained as below:
Step 1: Formulating the Problem

The objective of factor analysis is to summarize the interrelated variables into few
underlying factors. The variables are included in the analysis based on past
information, theory, and personal judgment.
The independent variables for factor analysis are age, income, frequency of online
shop visit in a month, service quality, product quality, price, service availability, web
page design, and after sales service.
In this case, the underlying factors related to demand and growth of online shopping
system is attempted to find out.
Step 2: Constructing the Correlation Matrix

Correlation matrix examines the appropriateness of factor analysis. For the factor
analysis to be appropriate, the variable must be correlated.
Formal statistics are available for testing the appropriateness of the factor model. Here
Bartlett’s test of sphericity and Kaiser-Meyer-Olkin Measure (KMO) of Sampling
Adequacy was used, while the null hypothesis is that the variables are uncorrelated in
the population. In other words, the population correlation matrix is an identity matrix.
Table 5: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .676

Bartlett's Test of Sphericity Approx. Chi-Square 106.852
Df 36
Sig. .000
30
Interpretation
According to Table 5, the value of KMO is 0.676 which is greater than the desirable
value of 0.5. In addition, the value of Chi-Square is 106.852 with 36 degrees of
freedom, which is significance at the 0.05 level. But here the value of significance is
0.000, which is less than 0.05. From the above two points of view, null hypothesis is
rejected and factor analysis is appropriate technique for analysis correlation matrix.
31
Table 6: Correlation Matrix
Freque Satisf Liking

Monthl ncy of action Online Online of web Satisfacti
y online about shops shops page on about
income shops servic provide charges Products design Online
Age of of visit in e good reasona are of shops car
Respon Respon a qualit quality ble always Online parking
dent dent month y product price available shops facility
Corre- Age of
1.000 .697 .502 .375 .163 -.020 .013 .276 -.092
lation Respondent
Monthly income
.697 1.000 .606 .402 .286 .031 -.087 .340 -.151
of Respondent
Frequency of
Online shops .502 .606 1.000 .368 .239 .019 -.145 .047 -.464
visit in a month
Satisfaction
1.00
about service .375 .402 .368 .569 .123 .266 .335 .070
0
quality
Online shops
provide good .163 .286 .239 .569 1.000 .144 .379 .436 .054
quality product
Online shops
charge -.020 .031 .019 .123 .144 1.000 .308 .070 .057
reasonable price
Products are
.013 -.087 -.145 .266 .379 .308 1.000 .258 .400
always available
Liking of web
page design of .276 .340 .047 .335 .436 .070 .258 1.000 .100
Online shops
Satisfaction
about Online
-.092 -.151 -.464 .070 .054 .057 .400 .100 1.000
shops after sales
service
Interpretation
32
The results of factor analysis are given in the table 5. The null hypothesis, that the
population correlation matrix is an identity matrix, is rejected by the Bartlett's test of
sphericity. The approximate chi-square statistic is 106.852 with 36 degrees of
freedom, which is significant at the 0.05 level. The value of KMO statistic (0.676) is
also large (>0.05). Thus factor analysis may be considered an appropriate technique
for analyzing the correlation matrix of table 6.
Step 3: Determining the Method of Factor Analysis
After determining the appropriateness of factor analysis, an appropriate method must

be selected. Here the most commonly used method Principal Components Analysis is
used. It is used to determine the minimum number of factors that will account for
maximum variance in the data.
Table 7: Total Variance Explained
Extraction Sums of Rotation Sums of Squared

Initial Eigen values Squared Loadings Loadings
% of Cumulat % of Cumula % of Cumulative

Factor Total Variance ive % Total Variance tive % Total Variance %
1 2.978 33.091 33.091 2.978 33.091 33.091 2.798 31.093 31.093
2 2.032 22.575 55.665 2.032 22.575 55.665 2.212 24.572 55.665
3 1.019 11.319 66.984
4 .849 9.434 76.419
5 .714 7.933 84.351
6 .505 5.608 89.959
7 .382 4.243 94.202
8 .300 3.337 97.538
33
Table 7: Total Variance Explained
Extraction Sums of Rotation Sums of Squared

Initial Eigen values Squared Loadings Loadings
% of Cumulat % of Cumula % of Cumulative

Factor Total Variance ive % Total Variance tive % Total Variance %
1 2.978 33.091 33.091 2.978 33.091 33.091 2.798 31.093 31.093
2 2.032 22.575 55.665 2.032 22.575 55.665 2.212 24.572 55.665
3 1.019 11.319 66.984
4 .849 9.434 76.419
5 .714 7.933 84.351
6 .505 5.608 89.959
7 .382 4.243 94.202
8 .300 3.337 97.538
9 .222 2.462 100.000
Extraction Method: Principal Component Analysis
Interpretation
From Table 7 named Total variance explained presents the number of common factors
extracted, the eigenvalues associated with these factors, the percentage of total
variance accounted for by each factor and cumulative percentage of total variance
accounted for by the factors. Using the criterion of retaining only factors with
eigenvalues of 1 or greater, two factors were retained for rotation. These two factors
accounted for 31.093% and 24.572% of the total variance respectively for a total of
55.665%.
Step 4: Determining the Number of Factors

34
In order to summarize the information contained in the original variables, a smaller
number of factors should be extracted.
On the basis of determination, two factors were determined here. The advantage of
determining two factors is - easy to interpret or easy to summarize.
Step 5: Rotation of Factors

To enhance the interpretation of the solution factor rotation is often used. In complex
matrix, it is difficult to interpret the factor. Therefore, through rotation, the factor
matrix is transformed into a simpler one that is easier to interpret.
The most commonly used method for rotation is the varimax procedure was used here.
This method minimizes the number of variables with high loadings on a factor, which
enhances the interpretability of the factors. The factor matrix (unrotated) and rotated
factor matrix are shown by Table 8 and Table 9.
35
Table 8: Factor Matrixa (Unrotated)
Factors
1 2
Age of Respondent .731 -.257

Monthly income of Respondent .805 -.300
Frequency of Online shops visit in a month .677 -.514
Satisfaction about service quality .737 .250
Online shops provide good quality product .639 .423
Online shops charge reasonable price .152 .373
Products are always available .209 .785
Liking of web page design of Online shops .548 .358
Satisfaction about Online shops after sales service -.136 .696
Extraction Method: Principal Component Analysis.
a. 2 components extracted.
Table 9: Rotated Factor Matrix
Factors
1 2
Age of Respondent (V1) .770 .087

Monthly income of Respondent (V2) .855 .081
Frequency of online shop visit in a month (V3) .834 -.168
Satisfaction about service quality (V4) .554 .547
Online shops provide good quality product (V5) .391 .660
Online shops charges reasonable price (V6) -.026 .402
products are always available (V7) -.154 .798
Liking of web page design of Online shopping (V8) .337 .561
Satisfaction about Online shops after sales service facility
-.426 .567
(V9)
Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 3 iterations.
36
Interpretation
The rotated component matrix presents two types of rotated factors as stipulated in the
SPSS windows. Factor one contains four variables (e.g., V1=‘Age of Respondent’,
V2=‘Monthly income of Respondent’, V3= ‘Frequency of online shop visit in a
month’, V4= ‘Satisfaction about service quality’) that clearly reflect the highly
involvement with customers’ positive perception regarding selection of Online
shopping and was thus labeled as “personal factors” such as age, income etc.
(demographic variable). Factor two contains four variables (e.g., V5= ‘Online
shopping provide good quality product’, V7= ‘products are always available’ V8=
‘Liking of web page design of Online shops, V9= ‘Satisfaction about Online shops
after sales service facility’) that specially indicate the relationship among all kinds of
product quality is good, attractive web page design and secured after sales service
facilities and was labeled “online shop related factor”.
Step 6: Interpretation of Factors

Interpretation is based on identifying the variables that have large loadings (absolute
values more than 0.30 in factor matrix for unrotated and rotated) on the same factor.
Factor loading plot is also used in interpretation of factors.
Table 10: Factor Matrix Before and After Rotation
Variables 1 2 Variables 1 2
1 (Q2) X 1 (Q2) X
2 (Q5) X 2 (Q5) X
3 (Q6) X 3 (Q6) X
4 (Q8) X 4 (Q8) X
5 (Q9) X X 5 (Q9) X
6 (Q10) X 6 (Q10) X
7 (Q11) X 7 (Q11) X
8 (Q12) X X 8 (Q12) X
9 (Q13) X 9 (Q13) X
A. High Loadings Before Rotation B. High Loadings After Rotation
37
Step 7: Calculating Factor Scores
Following factor interpretation, calculating factor scores are important while
subsequent multivariate analysis is required. In this research it is not necessary.
Selecting a surrogate variable is also used instead of calculating factor scores. The
factor score are shown in Table 11 named Factor Score Coefficient Matrix.
Table 11: Factor Score Coefficient Matrix
Factor
1 2
(Personal ( Online shop
factors) related factors)
Age of Respondent .276 -.007
Monthly income of Respondent .308 -.015
Frequency of Online shops visit in a month .315 -.129
Satisfaction about service quality .169 .219
Online shops provide good quality product .102 .281
Online shops charge reasonable price -.034 .188
Products are always available -.105 .378
Liking of web page design of Online shops .089 .239
Satisfaction about Online shops after sales service -.191 .289
Rotation Method: Varimax with Kaiser Normalization
Step 8: Determining the Model Fit

The final step in factor analysis is the determination of model fit. The differences
between the observed correlations and the reproduced correlations can be examined to
determine model fit. These differences are called residuals. The large numbers of
residuals mean that the factor model does not provide a good fit to the data.
38
Table 12: Reproduced Correlations
Satisfact
ion
about
Freque Liking
Online
ncy of Online of
shops
Monthly Online Satisfa shops Online product interior
after
income shops ction provide shops s are atmosph
sales
Age of of visit in about good charges always ere of
service
Respon Respond a service quality reasonabl availabl Online
dent ent month quality product e price e shops
Repr Age of .600a .665 .627 .474 .358 .015 -.050 .308 -.279
oduc Respondent
ed Monthly income .665 .738a .699 .518 .387 .011 -.067 .334 -.318
Corre of Respondent
lation
Frequency of
Online shops .627 .699 .723a .371 .215 -.089 -.262 .187 -.450
visit in a month
Satisfaction
about service .474 .518 .371 .606a .577 .206 .351 .494 .074
quality
Online shops
provide good .358 .387 .215 .577 .588a .255 .466 .502 .208
quality product
Online shops
charge .015 .011 -.089 .206 .255 .162a .325 .217 .239
reasonable price
Products are -.050 -.067 -.262 .351 .466 .325 .660a .396 .519
always available
Liking of web
page design of .308 .334 .187 .494 .502 .217 .396 .429a .175
Online shops
39
Satisfaction
about Online
shops after sales -.279 -.318 -.450 .074 .208 .239 .519 .175 .504a
service
Resi- Age of .032 -.126 -.100 -.194 -.035 .063 -.032 .187
dualb Respondent
Monthly income .032 -.093 -.116 -.102 .020 -.020 .006 .168
of Respondent
Frequency of
Online shops -.126 -.093 -.003 .024 .108 .117 -.140 -.013
visit in a month
Satisfaction
about service -.100 -.116 -.003 -.008 -.083 -.085 -.159 -.004
quality
Online shops
provide good -.194 -.102 .024 -.008 -.111 -.087 -.065 -.154
quality product
Online shops
charge -.035 .020 .108 -.083 -.111 -.017 -.147 -.182
reasonable price
Products are .063 -.020 .117 -.085 -.087 -.017 -.138 -.119
always available
Liking of web
page design of -.032 .006 -.140 -.159 -.065 -.147 -.138 -.075
Online shops
Satisfaction
about Online .187 .168 -.013 -.004 -.154 -.182 -.119 -.075
shops after sales
service
a. Reproduced communalities
40
b. Residuals are computed between observed and reproduced correlations. There are 24 (66.0%) non-
redundant residuals with absolute values greater than 0.05.
Interpretation
According to Table 12 there are 24 (66.0%) non-redundant residuals with absolute
values greater than 0.05. This means that the factor model is 34 % fit.
8.3 Cluster Analysis
Cluster analysis is conducted by following steps from problem formulation to

assessing reliability and validity.
Step 1: Formulation of the problem
The problem for cluster analysis is to find out homogeneous groups of customer based
on their attitudes. In this research a clustering of respondents based on their demand
toward online shopping system was considered. Six variables have been identified.
Respondents were asked to express their degree of agreement with these six
statements on 9-point Likert scale.
Six variables are shown as below:
V1: I prefer to visit online shops on different occasions.

V2: I consider discount while shopping online.
V3: Service and product quality is very important to me
V4: Price influences me to select online shops.
V5: Brand is not important to me.
V6: I do not want after sales service
Data obtained from a sample of 100 respondents are shown in the Table in Appendix.
Step 2: Selection of a distance of similarity measure
Because the objective of clustering is to group similar objects together, some measure
is needed to assess how similar or different the objects are. The most common
approach is to measure similarity in terms of distance between pairs of objects. To
41
measure the similarity between objects, Euclidean distance measure was used, which
is the most commonly used measure of similarity.
Step 3: Interpretation and profiling the clusters
To interpret and profile the cluster findings means of the variable of each cluster
(Cluster Centroids) is necessary. These are shown in the following table:
Table 13: Cluster Centroids
Means of Variables
Cluster V1 V2 V3 V4 V5 V6
No
1 6.64 3.79 7.57 4.84 2.14 1.86
2 6.81 4.81 8.06 6.06 2.44 7.44
V1: I prefer to visit online shops on different occasions.

V2: I consider discount while shopping online.
V3: Service and product quality is very important to me
V4: Price influences me to select online shops.
V5: Brand is not important to me.
V6: I do not want after sales service
Interpretation
The centroids were used to describe each cluster by assigning it a name or label. The
two clusters are labeled as below:
Cluster 1: It has highest values in V1 and V3. On the other hand, it has lowest values
on V5 and V6. This group of customer is very brand sensitive. This group fit in to
upper class citizen and labeled as prosperous.
Cluster 2: This cluster has highest values on V3, V4, and V6. It labels that this group
of customer is price sensitive. On the other hand it has lowest values in V2 and V5.
42
They want to cost less for quality product and service. They also need after sales
service. This group can be labeled as economical.
8.4 Reasons behind not purchasing from online shop
The above survey reveal that, because of higher price of online shops 33% of the
respondents do not purchase from online shop. 18% of the respondents do not shop
from online because they do not have much knowledge about how to shop online.
17% of the respondents do not use this shopping system because they think this type
of shopping system is less secured. 11% of the respondents think that payment system
is complex in online shopping system. That is why they do not use this system. 10%
of the respondents are more brand oriented. They do not buy products from online
because most of the well known fashion houses are still of online shopping system.
Another reason of not purchasing from online shopping is that online shops have
lesser amount of products. Only 2% respondents indicate that they do not buy from
online shops because our Internet speed is slow and poor.
43
Chart 3: Reasons behind not purchasing from online shop
9.0 Recommendations
A class issue seems to be surfacing in the realm of shopping behavior. Illiterate and
limited income people would seem to be deprived of online shops products and
services. This shopping system required sound infrastructure of communication or
telecommunication system. To solve this income, education, and information
disparity there are some suggestions:
 To attract new visitors and to encourage revisits, online marketers should

pay close attention to the seven Cs (context, content, community,
customization, communication, connection, and commerce) of successful
web site design.
44
 They should prepare creative advertisements of their sites in offline print
media like newspaper, magazine, billboard etc and broadcast advertisements
through radio, and television that will communicate limited income people.
 Online shops should try to offer different quality products over online so
that upper, middle, and lower class people can become more interested to
use online shops regularly.
 Provide specific effort in viral marketing. Encourage customers of online
shops to inform others about this service.
Including new and improved value added products or services and pricing the
online marketers can follow the subsequent strategies-
 to find cost effective ways to increase market size and generate higher
revenues,
 to gain competitive advantage in factors other than just the price,
 to regularly collect information about customer needs,
 to perform marketing activities based on knowledge about customers,
 to base prices on what competitors and brick and mortar shops charge and
what the market is willing to pay, and
 to attend in every fair and try to show the mass audience the convenience of
using online shopping system and generate more revenue.
The government of the country should also take some actions. Here are some
suggestions regarding the government:
 improve the poor infrastructure of the communication system,

 improve the old and conservative banking system of government banks and
force them to try new technology like issuing credit or debit cards, and
 arrange, fairs, seminars, symposiums, etc., to make mass audience aware
about digital system as well as online shopping system by science and ICT
ministry.
45
10.0 Conclusion
Bangladesh is one of the poorest, most densely populated and least developed
countries in the world. 31.5 % people of this country are living below the national
poverty line [52]. Only 24% people out of total population are living in the urban
areas [53]. The literacy rate of population age 15 is 55% of the total population
[54]. Telecommunication and Internet technologies are the backbone of online
shopping in any country. Bangladesh has slow pace of development in
telecommunication and Internet technologies. Except the major cities, the benefits of
these technology advancements are not dispersed in the same way all over the country.
Internet access is limited to specific regions and specific segments of the society. In
spite of all these conditions, online shopping in Bangladesh is becoming more
popular day by day. Because of proliferated use of handheld and wearable devices at
present the reach of Internet seems rapid. In future it may not be quite impossible
that the traditional shopping system would be less popular than online shopping.
46
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51
Appendices:
Appendix-1 Questionnaire
Research Topic: Online Shopping in Bangladesh: Present Scenario and Prospect
Respondent
1. Name: ……………………………………… No:
(Please √ the box, which is the appropriate for you)
2. Age (years):
1 2 3 4 5
Below 18 18-25 26-33 34-41 Above 42
3. Gender:
1 2
Male Female
4. Occupation:
1 2 3 4 5
Student Service Holder Business Man Housewife Others
5. (Your) Monthly Income/ amount of money you get to live:

1 2 3 4 5
Below 5,000 5,000-14,999 15,000-24,999 25,000-34,999 Above 35,000
BDT BDT BDT BDT BDT
6. How often do you visit online shops a month?

1 2 3 4 5
1-4 times 5-8 times 9-12 times 13-16 times Over 17 times
7. What is your attitude toward online shopping system?

1 2 3 4 5 6 7 8 9
Extremely Very Bad Somewha Neither Bad Somewha Good Very Excellent
Bad Bad t Bad Nor Good t Good Good
52
8. I am satisfied with online shops service quality.
1 2 3 4 5 6 7 8 9
Extremel Very Disagre Somewha Neither Agree Somewhat Agre Very Extremely
y disagree Disagree e t Disagree nor Disagree Agree e Agree Agree
9. Online shops provides quality product.

1 2 3 4 5 6 7 8 9
10. Online shops charges reasonable price.
1 2 3 4 5 6 7 8 9
11. All items are always available, when I visit online shops.
1 2 3 4 5 6 7 8 9
12. I like the design of online shopping websites.

1 2 3 4 5 6 7 8 9
Extremel Very Disagree Somewh Neither Agree Somewhat Agre Very Extremely
y disagree Disagree at nor Disagree Agree e Agree Agree
Disagree
13. I am satisfied with online shops after sales service facility.
1 2 3 4 5 6 7 8 9
Extremely Very Disagre Somewha Neither Agree Somewhat Agre Very Extremely
Disagree Disagr e t disagree nor Disagree Agree e Agree Agree
ee
53
14. Please give your opinion(s) regarding the following statements.
(Please √ the box according to your agreement or disagreement of the statement)
Statements Extremely Very Disagree Somewhat Neither Somewhat Agree Very Extremely
Vari Disagree Disagree disagree Agree nor Agree Agree agree
able Disagree
V1
No I prefer to 1 2 3 4 5 6 7 8 9
visit online
shops on
different
occasions.
V2 I consider 1 2 3 4 5 6 7 8 9
discount
while
shopping
online.
V3 Service and 1 2 3 4 5 6 7 8 9
product
quality is very
important to
V4
me 1 2 3 4 5 6 7 8 9
Price
influences me
to select
online shops.
V5 Brand is not 1 2 3 4 5 6 7 8 9
important to
me.
V6 I do not want 1 2 3 4 5 6 7 8 9
after sales
service
15. What is the main reason behind not purchasing from online shops? (Please
select any one).
A. Less web presence of well known fashion houses
B. Less security
C. Not as much knowledge about online shopping
D. Higher price than visible shop
54
E. Lesser amount of product
F. Complexity in payment system
G. Poor Internet speed
(Thank you for your kind assistance by providing valuable information)
55
Appendix 2: Regression Analysis
Coefficientsa
Standard-
ized
Unstandardized Coefficient Collinearity
Coefficients s Statistics
Std.
Model B Error Beta t Sig. Tolerance VIF
1 (Constant) 2.057 1.244 1.653 .109

Age of Respondent .066 .148 .084 .450 .656 .465 2.149
Monthly income of
.007 .172 .008 .038 .970 .365 2.742
Respondent
Frequency of online
-.119 .299 -.079 -.399 .693 .415 2.408
shops visit in a month
Satisfaction about
.533 .185 .496 2.885 .007 .552 1.811
service quality
Online shops offer good
.029 .180 .028 .162 .873 .535 1.870
quality product
Online shops charge
-.066 .086 -.104 -.764 .451 .886 1.128
reasonable price
All types of product
items are always .241 .137 .289 1.761 .088 .606 1.650
available
Like of online shops
.131 .142 .143 .925 .362 .679 1.472
web page design
Satisfaction about online
-.218 .104 -.339 -2.098 .044 .624 1.602
shops after sales service
a. Dependent Variable: demand and growth online shops
56
Appendix 3: Cluster Analysis
N % of Combined % of Total
Cluster 1 35 35.0% 35.0%
2 25 25.0% 25.0%
3 40 40.0% 40.0%
Combined 100 100.0% 100.0%
Total 100 100.0%
Case Processing Summarya,b
Cases
Valid Missing Total
N Percent N Percent N Percent
100 100.0 0 .0 100 100.0
a. Squared Euclidean Distance used
b. Average Linkage (Between
Groups)
Agglomeration Schedule
Cluster Combined Stage Cluster First Appears
Stage Cluster 1 Cluster 2 Coefficients Cluster 1 Cluster 2 Next Stage
1 80 100 .000 0 0 21
2 79 99 .000 0 0 22
3 78 98 .000 0 0 23
4 77 97 .000 0 0 24
5 76 96 .000 0 0 25
6 75 95 .000 0 0 26
7 74 94 .000 0 0 27
8 73 93 .000 0 0 28
9 72 92 .000 0 0 29
10 71 91 .000 0 0 30
11 70 90 .000 0 0 31
12 69 89 .000 0 0 32
57
13 68 88 .000 0 0 33
14 67 87 .000 0 0 34
15 66 86 .000 0 0 35
16 65 85 .000 0 0 36
17 64 84 .000 0 0 37
18 63 83 .000 0 0 38
19 62 82 .000 0 0 39
20 61 81 .000 0 0 40
21 20 80 .000 0 1 61
22 19 79 .000 0 2 62
23 18 78 .000 0 3 63
24 17 77 .000 0 4 64
25 16 76 .000 0 5 65
26 15 75 .000 0 6 66
27 14 74 .000 0 7 67
28 13 73 .000 0 8 68
29 12 72 .000 0 9 69
30 11 71 .000 0 10 70
31 10 70 .000 0 11 71
32 9 69 .000 0 12 72
33 8 68 .000 0 13 73
34 7 67 .000 0 14 74
35 6 66 .000 0 15 75
36 5 65 .000 0 16 76
37 4 64 .000 0 17 77
38 3 63 .000 0 18 78
39 2 62 .000 0 19 79
40 1 61 .000 0 20 80
41 40 60 .000 0 0 61
42 39 59 .000 0 0 62
43 38 58 .000 0 0 63
44 37 57 .000 0 0 64
45 36 56 .000 0 0 65
46 35 55 .000 0 0 66
47 34 54 .000 0 0 67
58
48 33 53 .000 0 0 68
49 32 52 .000 0 0 69
50 31 51 .000 0 0 70
51 30 50 .000 0 0 71
52 29 49 .000 0 0 72
53 28 48 .000 0 0 73
54 27 47 .000 0 0 74
55 26 46 .000 0 0 75
56 25 45 .000 0 0 76
57 24 44 .000 0 0 77
58 23 43 .000 0 0 78
59 22 42 .000 0 0 79
60 21 41 .000 0 0 80
61 20 40 .000 21 41 96
62 19 39 .000 22 42 94
63 18 38 .000 23 43 96
64 17 37 .000 24 44 91
65 16 36 .000 25 45 81
66 15 35 .000 26 46 95
67 14 34 .000 27 47 83
68 13 33 .000 28 48 84
69 12 32 .000 29 49 87
70 11 31 .000 30 50 85
71 10 30 .000 31 51 81
72 9 29 .000 32 52 89
73 8 28 .000 33 53 86
74 7 27 .000 34 54 82
75 6 26 .000 35 55 82
76 5 25 .000 36 56 85
77 4 24 .000 37 57 83
78 3 23 .000 38 58 86
79 2 22 .000 39 59 84
80 1 21 .000 40 60 90
81 10 16 2.000 71 65 88
82 6 7 2.000 75 74 87
59
83 4 14 3.000 77 67 88
84 2 13 3.000 79 68 92
85 5 11 3.000 76 70 89
86 3 8 3.000 78 73 93
87 6 12 4.000 82 69 90
88 4 10 4.000 83 81 94
89 5 9 4.500 85 72 92
90 1 6 5.000 80 87 91
91 1 17 8.250 90 64 93
92 2 5 10.167 84 89 97
93 1 3 11.300 91 86 95
94 4 19 13.250 88 62 98
95 1 15 14.000 93 66 99
96 18 20 16.000 63 61 97
97 2 18 24.000 92 96 98
98 2 4 35.943 97 94 99
99 1 2 48.292 95 98 0
60
Appendix-4 Reasons behind not purchasing from online shop
Statistics
Main_reason_behind_not_purchasing_from_online_shops
N Valid 100
Missing 0
What is the main reason behind not purchasing from online shop?
Cumulative
Frequency Percent Valid Percent Percent
Valid Less web presence of well
10 10.0 10.0 10.0
known fashion houses
Less security 17 17.0 17.0 27.0
Not as much knowledge
18 18.0 18.0 45.0
about online shopping
Higher price than visible
33 33.0 33.0 78.0
shop
Lesser amount of product 9 9.0 9.0 87.0
Complexity in payment
11 11.0 11.0 98.0
system
Poor Internet speed 2 2.0 2.0 100.0
Total 100 100.0 100.0
61

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ONLINE SHOPPING IN BANGLADESH: PRESENT SCENARIO AND PROSPECT

A THESIS SUBMITTED TO THE DEPARTMENT OF MARKETING

UNDER THE SUPERVISION

FACULTY OF BUSINESS STUDIES

I do hereby declare that the thesis entitled “Online Shopping In Bangladesh:

Md. Zakir Hossain Bhuiyan Ph.D

I would like to express my gratitude to the most Omnipotent and Omnipresent

TITLE NO CONTENTS PAGE NO

5.5 Data Collection 12

7.8 Problems of Online Shopping System in Bangladesh 23

8.1 Multiple Regression Analysis 25

Bangladesh has slow pace of development in telecommunication and Internet

TITLE NO FIGURES PAGE NO

Table 2 Model Summary 25

The research objectives are-

1. to know the emergence of online shopping,

4.1 Research Framework

Figure 1: Research Framework

Conduct survey Primary data

Figure 2: Conceptual Model

Y = Demand and growth of online shopping

β0 = Constant (intercept of the variable)

β3 = Coefficient of frequency of visit

X3 = Importance of frequency of visit

β4 = Coefficient of service quality

X4 = Importance of service quality

β5 = Coefficient of product quality

X5 = Importance of product quality

β7 = Coefficient of service availability

X7 = Importance of service availability

β8 = Coefficient of website design

X8 = Importance of website design

β9 = Coefficient of after sales service

The above model is estimated based on the model given below-

Ŷ= a+b₁x₁+b₂x₂+b₃x₃+b₄x₄+b₅x₅+b6x6+ b7x7+ b8x8+ b9x9

The components of research design are described briefly as below:

5.1 Nature of the Study

5.2 Study Area

Currently nonresident affluent Bangladeshi people, rich resident consumers’,

5.4 Sample Size

5.5 Data Collection

5.6 Measurement and Scaling

6.1 Regression Analysis

6.2 Factor Analysis

6.3 Cluster Analysis

Cluster analysis is a class of techniques used to classify objects or cases in

Statistical software SPSS is used to process the collected data.

7.1 The emergence of online shopping

7.2 How online shopping system works

Customers select the delivery area and enter their address.

Sellers deliver the product to the address entered by the customer

Chart 1: Steps of online shopping system

7.3 Present Internet and online shopping condition in Bangladesh

Population Users % of GDP

In recent times Bangladesh government has approved 3G technology in Internet. It has

1. aarong.com 60. hotofferbd.com

7.4 Types of online shops operated in Bangladesh

 Manufacturer sites: Manufacturer sites are sites where manufacturers directly

In Bangladesh mainly three types of online shops that are available: