o analyze the impact of online ordering of food on customers.
• One of our objectives of this research was to understand how does
onilne ordering of food has influenced and changed the way
of their eating habits.
• To know the preferences of customers while ordering food online.
• We were also trying to find how does customers think & how they
react while ordering food online.
CHAPTER 1
INTRODUCTION
1.1 ONLINE INDUSTRY
Online industry refers to the collection of service organizations that provide dial-up and
broadband access to databases, shopping, news, weather, food, teaching, business, sports, e-mail,
etc. Today, the Internet is the delivery mechanism for almost all online activity. In the recent
years, the Internet has become the perfect venue to do business. From small start up independent
franchises to big prominent names in their fields, it's become an imperative for all business
owners to establish a presence on the Internet.
Even through economic turmoil, you'll see that starting an online business still continues to be
somewhat of a phenomenon. If you still haven't had the chance to get in on the action, you may
be wondering what could possibly be in store for online business all over the world.
Demand for online business is still on the rise - as long as there are people who will demand for
new online business opportunities, you can expect the numbers to be on a continuous rise. And
with so many different opportunities that are available online, people now have a choice on
which business opportunities to go with.
It has become a new frontier where people everywhere now have the chance to become
successful and rich in any endeavor they choose. Just as long as there are companies who
continue to provide opportunities, there will always be people to support them. They provide
better opportunities - the great thing about the online business industry is that it's become
synonymous to flexibility that you can make it work for you any way you want it and not the
other way around.
1.1. ONLINE FOOD ORDERING
Online food ordering is a process of ordering food from a local restaurant or food cooperative
through a web page or app. Much like ordering consumer goods online, many of these allow
customers to keep accounts with them in order to make frequent ordering convenient. A
customer will search for a favorite restaurant, usually filtered via type of cuisine and choose
from available items, and choose delivery or pick-up. Payment can be amongst others either by
credit card or cash, with the restaurant returning a percentage to the online food company.
The concept of ‘Ordering Food Chain Industry’ includes various related concepts starting
from production to consumption. It begins at the level of farming and involves diverse kind of
agricultural activities, then sale of the product and finally consumption of product. In the Indian
ambient, the huge figure of food consumption, production and processing contemplates a
colossus market, which includes assorted related concepts starting from production to
consumption of food products.
‘Food’ may include cereals, pulses, vegetables, fruits, milk, fish, meat, and eggs. As compare to
rest of the world, Indian food chain industry is very vast and diversified, and moving fast from
traditional localized models to modern food industry and product models. Earlier people use to
satisfy their hunger through Tiffin’s and lunch boxes, they used to hesitate in order to try fast
food, but now all most 70% population of India prefer fast food as compare to Tiffin’s.
It may be contemplated that food processing and retail chains may give rise to competition
concerns. There are large amount of competition between MCDONALDS, SUBWAY,
DOMINOS, PIZZA HUT, ZOMATO, FOOD PANDA, etc in food chain industry. Later on due
to this scenario intervention of government also take place.
Further, India is committed towards social justice and one of the important elements of
Government Policy is to ensure food security for citizens of the country. Towards this end, the
Government manages a public distribution system (PDS) through efficient procurement at
Minimum Support Price (MSP), storage and distribution of food grains (cereals).
Earlier the concept of ordering food chain industry was somehow limited only to offline
structure. But due to the era of globalization & liberalization, ecommerce offers so much
promise for the food industry, but a promise unfulfilled. E-commerce has expanded rapidly as
retailers and other marketers of consumer packaged goods offer consumers the ability to shop
online, letting them shop when and where they want.
The food industry, however, has been the slowest major consumer sector to expand into e-
commerce growth, due to issues such as freshness, product damage, low margins compared to
other consumer products and logistical challenges. According to the research firm BI
Intelligence, only 15 percent of U.S. adults have bought food items online and only 1 percent of
food and beverage sales are purchased online.
BI Intelligence predicts that through 2018, online grocery sales will grow at a compound annual
growth rate of 21.1 percent, reaching nearly $18 billion by the end of the forecast period. BI
Intelligence offers the following factors for its optimistic assessment of online food industry:-
1. Convenience and a large selection of products.
2. Hectic schedule also promotes online food industry as a person saves their lot time
though ordering the food online
3. Some of the biggest names in tech — Amazon, eBay, and Google — are beginning to
offer and promote same-day delivery services. As consumers get used to the convenience
of ordering something online and receiving it the same day, food e-commerce will benefit
too, with people more likely to buy food they know they will get quickly.
India offers a wealth of young people, a key market for fast-food chains. Over 60% of India’s
current population is younger than 30 years old, and are welcoming of international brands. The
fast food industry will benefit from other factors as well, such as increases in nuclear families,
single-person households and the proportion of women in the workforce; as well as changing
lifestyles and eating patterns.
India's population stands at 1.2 billion, but it has only a little over 2,700 chain fast food outlets,
leaving most people unreached, according to Euro monitor International. Fast food has yet to
broadly expand beyond the largest cities. India also has a new prime minister, Narendra Modi,
who has been a vocal advocate of increased foreign direct investment.
The country's fast-food market today is only one tenth the size of China's, said Ajay Kaul, CEO
of Jubilant FoodWorks, a company that grants franchises in India for Domino's Pizza and
Dunkin Donuts. But unlike China, which saw a decline in fast-food sales last year, India's market
is expected to grow, thanks to changing consumer preferences and the largest youth population
on earth.
KFC, owned by Yum! Brands, had a slight edge over McDonald's because of its chicken-
centered menu, which has worked well in India, said Arvind Singhal, chairman of Technopak, a
management consulting firm in India. While the U.S. chains have "Indianized" their menus,
Singhal said that only partly explains the rising appeal of fast food in India.
The country has 356 million people between the ages of 10 and 24, giving it the world's largest
youth population, according to a United Nations report. With more young people entering the
workforce daily, growth in the economy, a rising female work force, and increased mobility
among consumers, the traditionally difficult Indian market has become hungry for a more
diverse menu, Singhal said.
Domino's now generates more than 17.2 billion rupees ($277 million) in revenue, compared with
$222 million for McDonald's. Domino's, which is valued at $1.6 billion in India, has tried
expanding its business by getting Indian consumers to view pizza as a meal replacement, and not
just a snack, Kaul said.
When it comes to the fast-serve coffee industry, most Indians still refrain from the American
habit of daily, morning drinking before and during work. To get around the cultural challenge,
Dunkin Donuts entered the food market, offering fast-food sandwiches—the only country where
the chain does so.
"What's important for an American brand to understand is that the Indian terrain is atypical—
consumers are clearly most demanding, and there is too much focus on food," Kaul said.
Mobile ordering has become the buzz word for the food industry in 2015. Online ordering via
both desktops and mobile apps are increasingly becoming common for fast food and quick
service restaurants. According to Eat Street, an online ordering provider, digital ordering is
growing 300 percent faster than the dine-in traffic. Not surprisingly, food giants and restaurant
chains are announcing their own mobile ordering apps or plan to do so in the near future.
In an April 2014 online survey conducted by AYTM, 32% of respondents said they “regularly”
ordered food online, of which 4% ordered using mobile apps.
Another survey conducted by ad agency Sullivan Higdon & Sink in February 2014 claims that of
the US internet users, 26% respondents said they had ordered online from a restaurant in the past
year, with parents or boomers being 37% and millennials consisted of 35% of the age groups
among whom online ordering was most common. While, 58% found the idea of ordering food
online appealing.
1.2 RESEARCH OBJECTIVE:-
The objectives of my study are as follows:-
➢ To study the online food ordering behavior of consumer.
➢ To study the impact of factor affecting online food ordering behavior of consumer.
1.3 LITERATURE REVIEW AND / OR THEORETICAL
BACKGROUND
LITERATURE REVIEW
A literature review is a text of a scholarly paper, which includes the current knowledge including
substantive findings, as well as theoretical and methodological contributions to a particular topic.
Literature review use secondary sources, and do not report new or original experiment work. It is
an essential test of the research question against that which is already knownabout the subject.
Leedy (1997) states that, the purpose of a literature review is to “look again” at the literature
compiled by others in a related area not necessarily identical but collateral to your own area of
study. In the study various public relations, online publications and journals will be reviewed.
Knowledge obtained from the already existing literature will broaden the scope of the problem
under study.
PURCHASING INTENTION
From the study of Pan (2007), the author cited from Engel, Blackwell and Miniard (1990), that
defines purchasing intention as a psychological process of decision-making. According to Pan
(2007), "purchasing decision process" is when the relevant information is searched by the
consumers that are motivated by the fulfillment of demands according to personal experience
and the external environment; then after accumulating a certain amount of information, they
begin to evaluate and consider; and finally after comparison and judgement, they make the
decision on certain product.
ONLINE FOOD CHAIN INDUSTRY, ONLINE FOOD ORDERING,
INTERNET and CONSUMER PERCEPTION
Mobile ordering has become the buzz word for the food industry in 2015. Online ordering via
both desktops and mobile apps are increasingly becoming common for fast food and quick
service restaurants. According to Eat Street, an online ordering provider, digital ordering is
growing 300 percent faster than the dine-in traffic. Not surprisingly, food giants and
restaurant chains are announcing their own mobile ordering apps or plan to do so in the near
future.
In an April 2014 online survey conducted by AYTM, 32% of respondents said they “regularly”
ordered food online, of which 4% ordered using mobile apps.
According to Priyanka R. shikandar the advancement in information and communication
technology (ITC) has greatly influenced the business transactions. The adoption of wireless
technology & emergence of mobile devices has led to automation in the hospitality industry.
Business in hospitality industry such as restaurants can be improved with the combination of
wireless and mobile technologies. The competition in restaurant business has increased with the
advancements in food ordering techniques.
The earlier food ordering system was entirely a manual process which involved waiters, pen and
paper. The waiter had to note down orders from customers, take these orders to kitchen, update
them in records and again make bill. Even though this system is simple it may involve human
errors in noting down the orders. To overcome these limitations in manual system some systems
were developed later like PDA based systems and multi-touchable restaurant management
systems to automate food ordering process.
PDAs (personal digital assistants) are well known for their portability feature and ability to
communicate with personal computers but they too have some limitations. PDA-based systems
lack ubiquitous communication, are exposed to health hazards ,has lower GPU (graphical
processing unit) and hardware support due to which menu customization and real time
communication cannot be done, and increase the restaurant expanses when needed in large
quantity . The multi-touchable restaurant management systems also have limitations like: they
usually require low resolution output of the monitor, can produce activation without touching the
screen and the cost to produce the special Infrared bezel for touch screens is very high.
The CWOS-RTF was developed as one of the solutions for the PDA based system. It is a
wireless food ordering system which made the use of smart phones to place orders. Taking an
idea form this system we have proposed our system AOS-RTF, which is specially designed for
Android Devices.
Sherat Murat Alagoz & Haluk Hekimoglu said that there are more than 1.46 billion internet
users around the world and the number is growing rapidly day by day (Internet World Stats,
2009). While the capabilities of internet becomes more complicated the marketing, accounting,
advertising, educating habits and methods also change simultaneously.
Online shopping is a new developing business, by which customers are able to reach the
products on internet as well as sellers can reach to customers in the same way. Besides, shopping
online enables customers to find more different kinds of products than shopping in traditional
way.
It becomes possible to compare products, compare prices and shop from different magazines at
the same time. The most visited online food ordering website in Turkey, '[Link]' has
shared the user statistics of 2011.
According to that, 28 million portion of food was ordered online just in 2011. Despite the rapid
improvement in this sector, many researches are carried out about the main factors that affect the
consumers' attitudes against online shopping. Especially the technology acceptance model
(TAM) (Davis, 1989; Davis, Bagozzi, and Warshaw, 1989) is considered as conceptual
framework. Besides, several factors are added to TAM and their effects are also tested.
Theoretical background
A group of related ideas that provides guidance to a research project.
Theories are constructed in order to explain, predict and master phenomena(e.g. relationships,
events, or the behaviour). A theory makes generalisations about observations and consists of an
interrelated, coherent set of ideas and models.
The e- commerce and internet sector has evolved rapidly, going through several distinct stages
since its beginnings in the 1970s:-
Birth of the internet
Earlier the internet was there for the technology related people. Initially designed in 1973, the
internet was a series of communication protocols whose father was Vinton Cerf who was a part
of a project sponsored by the U.S. Department of Defense’s Defense Advanced Research
Projects Agency (DARPA).
Creation of the web
The world wide web and the coding language of HTML were invented in 1989 and implemented
between 1990 and 1993 by Tim Berners-Lee, developing a never ending hyperlinked pages
database which consisted pool of information and were user friendly also.
The Growth of Internet
In 1993 and 1994 the entrepreneurs and other business related people that internet can be of great
help in commercialization of their products with a vast and global reach. Due to this adoption of
internet a vast and a drastic revolution was observed in retailing and service sector where people
were willing to pay eagerly due to convenience of online shopping.
The Bust
In mid 2000 the IT industry faced a big fall of recession which resulted in losing jobs,
unemployment, bankruptcy, shutting down f various MNC’s. Sellers of hardware, software,
consulting and telecommunications services suffered mightily. It became almost impossible for
the entrepreneurs to raise funds to sustain the business. It was a nightmare for many.
The phase of reality
In early 2003, the sector started settling into its shape and rapidly cathed a high pace of growth.
The consumers were more willing to buy products and services online be it any sector, from
hospitality to banking to stock markets. Businesses of all types were finding that the Internet
creates true operating efficiencies and drives profitability.
For example, while most of the airline industry suffered terribly in recent years, value- based
discount airlines Southwest and JetBlue enjoyed superior financial performance, in no small part
because of their use of e-commerce to efficiently book reservations and sell tickets online.
“Efficiency” is the most important factor in the e-commerce and Internet sector’s new found
success.
Trends in E-commerce 2014
The e-commerce has grown rapidly by 2014 in various forms:-
➢ Banking Sector
Banking sector has developed efficiently in the form of online banking, equities and has
made banking very easy for the customer. Due to this banking is now in the hands of the
customers available in the form of internet banking and mobile banking etc.
➢ Insurance Sector
Service providers like insurance companies have made risk coverage easier for the
customers due to various features like premium allocation and comparisons of various
policies from [Link].
➢ Online shopping
Online shopping stores like eBay, amazon, [Link], [Link], [Link] have
made shopping available 24×7 for the customers with availability of all kind of FMCG
products from apparels to electronics.
➢ Online Food ordering mechanism
Online Food ordering sites like [Link], zomato, swiggy etc have made online food
ordering convenient for the customers as nearby restaurants are just a click away.
