IMPACT OF PAY ON DELIVERY ON CONSUMER PURCHASING BEHAVIOUR (A CASE STUDY OF KONGA)

CHAPTER ONE

INTRODUCTION

 

1.1   Background to the Study

Traditional brick and mortar stores are giving way to online retailing in the retail industry (Frasquet and Miquel, 2017; Gawor and Hoberg, 2019). The term "online shopping," which has become popular in the current digital era, describes the purchasing and selling of goods through the Internet (Javadi et al. Sahney et al. (2012). (2013). Online shopping is becoming more and more popular in Nigeria because it's convenient and the prices of products and services are competitive.

According to a Phillips Consulting Limited (2014) survey report, Nigeria saw over $2 million in weekly online transactions in 2014, which amounted to almost $1.33 billion per month (Janet, 2016).
Shopping the old-fashioned way, which involves going to stores in person, can be time-consuming and difficult, particularly in a busy city like Lagos, which is home to an estimated 9 million people (Census, 2006).

The availability of an online store greatly aids people in fulfilling a variety of needs. Online shops have developed into platforms for e-commerce and marketplaces over time. Although they are all online shopping options, each of the three has unique features. Without the need for middlemen, an online store, also known as an online shop, enables direct communication between buyers and sellers via chat apps like Facebook, Instagram, WhatsApp, and Line. Customers can ask sellers directly about prices or any other product-related issues with this setup, and they can even haggle over prices if necessary.

E-commerce, on the other hand, is a simple method of purchasing goods where customers just select the item they want from a website, click "buy," and then pay the price that is displayed. E-commerce's growth has increased an organization's operational cost efficiency, particularly in the areas of labor and inventory management.

Customers can shop or transact e-commerce at any time, from any location, thanks to its convenience. They can look through a wealth of information about the goods they wish to purchase when they visit a website. Additionally, they are able to compare costs with other businesses. Additionally, consumers who shop online avoid standing in line to receive their purchases (Hajati, 2022). With an estimated yearly growth rate of 25%, Nigeria's e-commerce market is expanding rapidly (Janet, 2016).

The rapid growth of technology and the internet has resulted in the rise of various payment methods, particularly digital payments. Business professionals use this approach a lot, particularly in e-commerce. E-commerce platforms leverage digital payments for buying and selling transactions. In addition to digital payments, e-commerce also offers an alternative payment option known as pay on delivery, or cash on delivery (COD) (Vandiny et al., 2022).
With the Pay on Delivery service, customers can pay the seller when the items they ordered arrive at the specified address. Another way to characterize it is as a payment system in which, when the goods are delivered to the buyer, cash is traded for them. Customers benefit from this system since it guarantees the products will arrive safely. Furthermore, pay on delivery is a practical payment option that takes place after the goods are in the hands of customers and offers advantages like ease, efficacy, and a lower chance of fraud, according to Tussafinah (2018).

Pay on delivery is used in e-commerce far more frequently than other digital payment methods. In 2021, Badan Pusat Statistik (BPS) conducted a survey that supports this. Not all of the different payment methods that are available in e-commerce are equally well-liked. Bank transfers came in second with 16.33 percent of users, and pay on delivery came in first with 78.72 percent. In contrast, a very small percentage of people use certain payment methods, such as cards and e-wallets. In the end, the pay-on-delivery model shapes the entire shopping experience by influencing consumer trust and purchase intent in addition to allaying worries about payment security.

According to research, because flexible payment methods like pay-on-delivery reduce the perceived risk of online transactions, customers frequently choose them (Gao and Kauffman, 2020). Customers can inspect items before completing their purchase with this payment method, increasing customer satisfaction and retailer trust (Dholakia, 2021). Additionally, having this option for payment can promote impulsive purchases because customers might be more inclined to finish purchases without having to pay in full up front (Sharma et al. 2022).

Customer preferences for payment methods are greatly influenced by cultural factors. Due to restricted banking access and widespread mistrust of digital payment systems, cash on delivery is still preferred in many places, particularly in developing nations (Choudhury and Patra, 2021). This cultural tendency highlights the need to customize payment options to local preferences by influencing not only how consumers shop online but also which retailers they choose to support (Ravi & Mani, 2022).

The practice of paying at the point of delivery has drawn a lot of attention in the rapidly changing world of e-commerce due to its impact on customer purchasing patterns. Retailers looking to maximize their sales strategy must understand how this payment method influences consumer purchase behavior as online shopping continues to grow in popularity. Thus, the goal of this research.

 

1.2   Statement of the Problem

As more consumers gravitate toward online shopping, the convenience and speed of delivery options are becoming pivotal in their decision-making processes. Recent studies indicate that the perceived value of pay on delivery can enhance customer satisfaction and trust, potentially leading to increased purchase frequency and higher overall spending (Rao & Kumar, 2022). Conversely, concerns regarding additional fees and delivery reliability can deter consumers from completing purchases, illustrating a nuanced relationship between payment options and purchasing behavior.

Moreover, the integration of POD services affects consumer expectations regarding service quality and efficiency. According to a survey conducted by Smith et al. (2023), a significant percentage of consumers expressed a preference for POD due to its perceived security and control over their transactions. This preference has prompted retailers to adapt their strategies, balancing cost implications with consumer demand for flexibility. As businesses strive to meet evolving consumer expectations, understanding the interplay between payment methods and purchasing behavior becomes crucial for developing effective marketing and operational strategies in a competitive landscape.Top of Form

 

 

1.3 Objectives of the Study

The main objective of the study is to examine Impact of pay on delivery on consumer purchasing behaviour. Specific objectives of the study are:

1. To determine whether the availability of pay on delivery (POD) options influences consumers' frequency of online purchases.
2. To investigate consumers' attitudes towards POD, including their perceived benefits, risks, and preferences.
3. To evaluate the correlation between the use of POD and customer satisfaction with online shopping experiences.

1.4 Research Questions

To guide the study and achieve the objectives of the study, the following research questions were formulated:

1. Does the availability of pay on delivery options significantly impact the frequency of online purchases?
2. What are the primary factors that influence consumers' decision to choose pay on delivery over other payment methods?
3. Is there a correlation between customer satisfaction and the use of pay on delivery?

1.5 Research Hypothesis

The following research hypothesis was developed and tested for the study:

Ho: There is no significant impact of pay-on-delivery options on consumer purchasing behavior.

1.6 Significance of the Study

The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:

Firstly, the paper will benefit major stakeholders and policy makers in the Commerce sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.

Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analysed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organisations used as a case study.

Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.

1.7 Scope of the Study

The study is delimited to Konga. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.

1.8 Limitations of the Study

The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.

1.9 Organization of the Study

The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.

Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.

Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.

Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.

Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.

1.10 Definition of Terms

1.  Pay on Delivery (POD)

 A payment method that allows consumers to pay for their purchases at the time of delivery rather than in advance, often enhancing trust and satisfaction.

2.  Consumer Purchasing Behavior

 The decision-making processes and actions that consumers engage in when selecting, buying, and using products or services, influenced by various factors including payment options.

3.  Trust in E-Commerce

 The confidence consumers have in online transactions, which can be significantly impacted by payment methods like pay on delivery, potentially leading to increased purchase frequency.

4.  Perceived Risk

 The level of uncertainty consumers feel regarding the outcome of their purchases, which can be mitigated by the option of paying upon delivery, reducing concerns about fraud or product quality.

5.  Convenience Factor

 The degree to which a payment option simplifies the purchasing process for consumers, affecting their likelihood to complete a transaction; pay on delivery can enhance perceived convenience.

6.  Purchase Intent

 The likelihood that a consumer will proceed with a purchase, which may be influenced by payment options, including the availability of pay on delivery as a secure and flexible method.

7.  Consumer Satisfaction

 The overall contentment of consumers with their purchasing experience, which can be positively affected by pay on delivery options, as it allows for immediate inspection of goods before payment.

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