View of THE CHALLENGES AND OPPORTUNITIES OF E-COMMERCE IN INDIA: FUTURE PROSPECTIVE

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Vol. 05,Special Issue 02, (IC-IRSHEM-2020) February 2020, Available Online: www.ajeee.co.in/index.php/AJEEE

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THE CHALLENGES AND OPPORTUNITIES OF E-COMMERCE IN INDIA: FUTURE PROSPECTIVE

Dr. Sushil Kumar Daiya

Assistant Professor, Shri Jain P.G. College, Bikaner

Abstract - Electronic Commerce is the business environment in which information for the buying, selling and transportation of goods and services go electronically. E-Commerce allows business as to remain open for 24 hours a day, 7 days a week, giving customers and partner’s access at any time of the day or night. Many companies today engage in electronic commerce for direct marketing, selling and customer service, online banking and billing, secure distribution of information, value chain trading and corporate purchasing. E- commerce is playing one of the vital role in business options and facilitate to explore in the future. E-commerce is concerning the paradigm shift in the business world for trading.

Forecast of E-commerce is showing extraordinary prospects in business growth of Indian Economy. Backed by increased online user base & mobile phone presentation, Indian e- commerce has seen impressive growth in the last few years. Considering India’s demographic dividend & rising internet accessibility, the sector is slated to scale greater heights. Although, India’s overall retail opportunity is substantial, the sector is beset with some serious challenges. The main motive of this paper is to describe different opportunities & services offered by E-commerce to distributors, customers & producers.

This paper understands the essential growth factors required for E-commerce & in India, they also want to highlight the different challenges faced by E-commerce.

Keywords: E-commerce, Online retail shopping, Increasing internet users, Electronic fund transfer, Trading Indian Economy, Customers.

1 INTRODUCTION

Commerce refers to the paperless exchange of business information using EDI, email, electronic bulletin boards and other network-based technologies. Electronic commerce includes electronic trading of goods, services and electronic material. E-Commerce has included the handling of purchase transitions and funds transactions and transfer over computer networks. The e commerce sector has seen unprecedented growth in 2014. The growth was driven by rapid technology adoption led by the increasing use of devices such as smartphones and tablets, and access to the internet through broadband, 3G, etc. which led to an increased online consumer base. The growth shown by homegrown players such as Flip kart and Snap deal and the huge investor interest around these companies displayed the immense potential of the market.

With the entry of e-commerce behemoths such as Amazon and Alibaba, the competition is expected to further intensify. Both these international players come with deep pockets and the patience to drive the Indian ecommerce market. Also, their strong domain knowledge and best practices from their international experience give them an additional edge. Indian companies realize this, and are therefore aiming to continue their focus on expanding sellers and selection on their platforms, innovating on multiple customer touch points, and providing seamless and rapid delivery services in order to compete with the international entities. Competition is expected to continue, with these E- Commerce companies experimenting with different ways to attract customers and increase online traffic

The Indian government’s ambitious Digital India project and the modernization of India Post will also affect the e-commerce sector. The Digital India project aims to offer a one-stop shop for government services that will have the mobile phone as the backbone of its delivery mechanism. The programmer will give a strong boost to the e-commerce market as bringing the internet and broadband to remote corners of the country will give rise to an increase in trade and efficient warehousing and will also present a potentially huge market for goods to be sold.

India’s overall retail opportunity is substantial, a nd coupled with a demographic dividend i.e. young population, rising standards of living and upwardly mobile middle class and rising internet penetration, strong growth in e-commerce is expected. E-commerce processes are conducted using applications, such as email, fax, online catalogues and

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shopping cards, electronic data interchange (EDI), file transfer protocol and web services and e-newsletters to subscribers. E-Travel is the most popular form of e- commerce.

The e-commerce business will continue to attract investor interest. With mobile apps being developed by most ecommerce websites, smartphone is increasingly replacing PCs for online shopping. In 2013, only 10% of the mobile users used smartphones, and only 5% of the e-commerce transactions were made through a mobile device. Most mobile transactions so far are for entertainment, such as booking movie tickets and music downloads.

E-commerce is increasingly attracting customers from Tier 2 and 3 cities, where people have limited access to brands but have high aspirations. According to e-commerce companies, these cities have seen a 30% to 50% rise in transactions. Online Shopping, customers are also shopping online for weddings and festivals, thanks to wider range of products being offered and aggressive advertisements. The free and quick shipment and wider choice of products, along with the ease of shopping online as compared to in-store shopping, is also helping e-commerce gather momentum.

There is a recent trend of relatively newer products such as grocery, hygiene, and healthcare products being purchased online. Indian jewelry has also been in great demand among customers outside India. Export comprises 95% of cross-border e-commerce, with the US, UK, Australia, Canada and Germany being the major markets.

2 CHALLENGES OF E-COMMERCE IN INDIA

E-Commerce, in-spite of the opportunities it presents also has poses certain challenges which are sometimes too much to handle for start-ups:

 E-Infrastructural Issues: Internet is the backbone of e-commerce. Unfortunately, in India internet penetration is so far dismally low at 0.5 per cent of the population, penetration of personal computer (PC) as low as 3.5 per thousand of population and penetration of telephone only 2.1 per cent of population, e-commerce is not easily reachable remains to the common man.

 Branding & Marketing: To get people to come on an e-Commerce site and make a purchase involves heavy cost due to branding and marketing. This cost is significant and can be brought down to cost per customer, if the volumes permit to do so.

Experts say that the average figure for this metric in the current e-Commerce ecosystem is between INR 500 – 1000 customer, which isn’t sustainable for even medium sized companies, let alone early stage ones.

 Declining Margins: With the introduction of a large number of players in the already competitive e-commerce market, the customer is pampered by offering huge discounts, offers, taking returns etc. resulting in less margins.

2.1 Opportunities of E-Commerce

 OPPORTUNITY FOR RETAILERS: A retailer can save his existence by linking his business with the on-line distribution. By doing so, they can make available much additional information about various things to the consumers, meet electronic orders and be in touch with the consumers all the time. Therefore, E-Commerce is a good opportunity.

 OPPORTUNITY FOR WHOLE SALERS/DISTRIBUTER: In the world of Ecommerce the existence of the wholesalers is at the greatest risk because the producer can easily ignore them and sell their goods to the retailers and the consumers. In such a situation those wholesalers can take advantage of E-Commerce who are capable of establishing contractors with reputed producers and linking their business with the on-line.

 OPPORTUNITY FOR PRODUCERS : Producers can take advantages of e-commerce by linking themselves with on-line, by giving better information about their products to the other links in the business chain and by a having a brand identity.

 OPPORTUNITY FOR PEOPLE : As more people are getting linked with E-commerce, the demand for centre providing internet facility or cyber cafe is also increasing.

Hence, the people who wish to take advantage of it can establish cyber and have their benefits.

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3 E-COMMERCE COMPANIES NEED TO DO TO ACCELERATE GROWTH

 Customer experience : Easy transitions between ordering on tablets, mobile phones or PCs will have to be facilitated. They should also ensure sufficient after sales service and support. Online product reviews and rating, video more advanced sizing and fitting tools should be provided.

 Technological advancements: E-commerce companies constantly have to upgrade their offerings with changing technology. Shopping through mobiles have truly arrived, they need to devise easy to use mobile apps for their websites. They need to ensure that their websites have the required speed to do fast business, especially during sale, deals and discounts, Solution enabling seamless integration of back end and front end infrastructure.

 Convergence of online and offline channels: Easy transitions between ordering on tablets, mobile phones or PCs will have to be facilitated. They should also ensure sufficient after sale service and support. Online product reviews and ratings, videos, more advanced sizing and fitting tools should be provided.

 Delivery experience: With lack of integrated end to end logistics platform, the ecommerce industry is facing issues related to procurement operations and transportation. Online purchases from Tier – 2 and Tier- 3 cities are expected to significantly increase, thanks to the emergence of low cost smartphones.

 Payments and transactions: India continues to be a cash-based society due to limited banking and credit card penetration. This, combined with a lack of consumer trust in online merchants, has forced companies to offer CoD services, which imposes significant financial cost for firms in the form of labor, cash handling and higher returns of purchased items. Data protection and the integrity of the system that handles the data and transactions are serious concerns.

 Tax and regulatory environment : Laws regulating ecommerce in India are still evolving and lack clarity. Favorable regulatory environment would be key towards unleashing the potential of ecommerce and help in efficiency in operation, creation of jobs, growth of the industry, and investments in back-end infrastructure.

 Operational Framework : Companies in e-commerce will need to adapt and innovate constantly to sustain their business. Companies entered into the ecommerce industry as startups and have grown to a huge size aided by the continuous growth in the market but lack well defined capabilities and organizational structure.

 Digital infrastructure : Digital disruption has driven change in the e-commerce industry with shoppers embracing multiple touch points in their purchase journeys.

Companies should spend enough resources on technology development as also advertising and branding.

 Customer Acquisition : The customer acquisition costs in Indian e -commerce have been climbing rapidly due to intense competition between multiple well-funded players. Only 2% of website visits currently result into transaction. Thus, there is a gap between potential and actual buyers. Coupled with high transaction costs, this area could pose serious problems.

 Addressable markets : To grow their businesses, the Indian e-commerce sector needs to closely watch the growth of their markets in the Tier 2 and 3 cities. They need to improve their logistics and supply chain management in these cities.

 Customer convenience: By providing Cash on delivery payment option service to customers.

 Replacement guarantee: Should be Offers 30 day replacement guarantee to their customers.

 Reach: Enabling mobile-capable sites and supporting M-Commerce services.

 Location based services: Since customers these days are always on the move, promoting the right product at the right time and location becomes an integral aspect

 Multiple payment option: Standard credit cards, debit cards and bank payments option should be there

 Right content: Getting the right content and targeting customers with crisp and relevant information is of utmost importance to users on the move.

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 Price comparison: Providers offering instant price comparison are highly popular amongst the price conscious customers.

 Shipment option: Low cost shipment should be there. The convenience of collecting orders post work while returning home should be there.

 Logistical challenges: In India, the geographical spread throws logistical challenges. The kind of products being offered by providers should determine the logistics planning.

 Legal challenges: There should be legal requirement of generating invoices for online transactions.

 Quick Service: Timely service provided by the company.

 Terms and condition: T & C should be clear & realistic.

 Quality: The product quality should be same as shown on the portal.

 Customer care centre: A dedicated 24/7 customer care centre should be there.

4 FUTURE OF E-COMMERCE IN INDIA

India is developing rapidly towards e-commerce market trends day by day. The internet user base in India might still be mere 300 million which is much less as compared to the other developed countries but its surely expanding day by day. India has third largest internet population after US & China. Indian internet population was 205 millions in 2013 but projected to be second largest by 2016 with 330-370 million users. As per the last three years there is a rapid change in the scenario of e-commerce in India. More than 200 million users has been added during last three years. Growth of internet users is increasing very rapidly in India.

 Logistics & Supply Chain: Logistics failure in any area can mean detrimental damage to a startup’s future and can hurt the brand overall. Add to this the need for a guaranteed return policy. Getting this right is a challenge.

 Tax related issues: Tax rate system of Indian market is another factor for lesser growth rate of E-Commerce in India in comparison to other developed countries like USA and UK. In those countries, tax rate is uniform for all sectors whereas tax structure of India varies from sector to sector. This factor creates accounting problems for the Indian online business companies.

 Touch and Feel: Indian customers are more comfortable in buying products physically. Companies dealing with products like apparel, handicrafts, jewelry have to face challenges to sell their products as the buyers want to see and touch before they buy these stuffs.

 Social Media: Majority of online buying decisions are made on Social Media. Social network like Facebook, LinkedIn, Twitter, Google+, Pinterest etc have become a medium for easy log-in and purchase. Moreover, the clients can stay updated via the posts published on this media. Further, the advertising & promotions on these social sites has increased the chances of success of generating transactions to many folds.

 Drone Delivery: Companies have been working their way around to innovate the delivery process to shorten human effort as well as time. The answer to these problems is Delivery by Drones. DGCA is now fast tracking the process of issuing guidelines for the use of drones for civil purposes in India. If everything goes as per the plan, then India might become the first country in the world to allow the use of drones for civil purposes.

 App only Approach: Statistics suggest the future of internet lies in mobiles. Experts say more than 580 million people in India will use the Internet by 2018, and 70-80%

of them will access the Web on mobile phones. This will cause all major players to switch to app only model. About two- thirds of its online traffic of Flipkart comes from users in small cities and towns. Flipkart’s app-only approach assumes larger significance in these places where most people don’t own desktop computers and have limited access to broadband.

 Google’s Buy Now Button: Google is reportedly working on its own “Buy Now” style button that would allow e-shoppers search for products on Google and purchase them with a single click, right through Google’s own search results page. The button will be displayed near sponsored search results beneath a “Shop on Google” heading

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at the top of the page. When users click on the Google’s “Buy Now” button, they will be re-directed to another Google page that will allow them to choose specific item details, such as color and size, and then select a shipping route. Google would then pass on order information including the customer’s name and shipping address, to the retailer.

 Artificial Intelligence: As the ecommerce space gets saturated, investors looking for innovative use of technology are zeroing in on companies developing artificial intelligence (AI) solutions. Jet Airways is experimenting with one such solution devised by Vizury. It sifts through the individual’s public content on the internet, as well as the customer’s previous searches and creates an instant profile. Based on this information, the airline knows whether to package hotel deals, or simply stick with airfare discounts. The system also allows them to predict how likely is it for the customer to upgrade, and how flexible would the customer be to change travel location or date.

 Consumer Electronics & Fashion Apparel & Home Furnishing segments. E- commerce creates new opportunities for entrepreneurial start-ups. Ease of Internet access, Safe and secure payment modes coupled with aggressive marketing by E- Commerce Giants has revolutionized this segment. Rapid development in mobile technology has given way to Mobile Commerce with many E-Commerce companies shifting to App only model.

5 CONCLUSIONS

E-commerce is changing the way of buying & selling of product & services in India. E- Commerce is future of shopping. Due to E-Commerce the gap has been reduced between manufacturer & consumer. According to Indian population their vast scope for e-commerce because currently in India only 19% people using internet for selling & buying goods &

services so remaining percentage we can considered that we having scope in Indian Market.

There is weak Cyber security Law in India that is why Indian People are facing challenges toward e-commerce. The role of government is to provide a legal framework for e-commerce so that while domestic & international trade are allowed to expand their horizons, basic right such as privacy, intellectual property, prevention of fraud, consumer protection etc.

are all taken care of. The expansion of e-commerce has been developed in rural as well as urban area in reign able cost for consumption, because of that more people are getting linked with e-commerce & the ratio of that is getting increase day by day.

The future of E-Commerce is difficult to predict. There are various segments that would grow in the future like: Travel and Tourism, electronic appliances, hardware products and apparel. There are also some essential factors which will significantly contribute to the boom of the E-Commerce industry in India i.e. replacement guarantee, M- Commerce services, location based services, multiple payment option, right content, shipment option, legal requirement of generating invoices for online transactions, quick Service, T & C should be clear & realistic, the product quality should be same as shown on the portal, dedicated 24/7 customer care centre should be there. We found various types of opportunities for retailers, wholesalers/distributors, producers and also for people.

Retailers meet electronic orders and should be in touch with the consumers all the time.

Wholesalers can take advantage of E-Commerce who are capable of establishing contractors with reputed producers and linking their business with the online. Producers can also linking themselves with on-line, by giving better information about their products to the other links in the business chain and by a having a brand identity. As more people are getting linked with E-commerce, the demand for centre providing internet facility or cyber cafe is also increasing. Hence, the people who wish to take advantage of it can establish cyber and have their benefits. People could found various opportunities of employment. On the behalf of above said reports and experts view showed that the future of e-commerce in India would be bright in the upcoming years if all essential factors would be implemented.

5.1 Suggestion & Recommendation

 To define cybercrimes and suggest penalties and punishments.

 We need multi-channel shopping platform.

 Cash on delivery is the preferred payment mode.

 Online customer market place.

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 Beware our website will be hacked.

 E-commerce has reshaped the entertainment industry and it will continue to do so.

 The e-commerce business will continue to attract investor interest.

 Coordinating public and private sector electronic commerce facilities.

 Awareness education & skills to the consumer and students.

 Ensuring flexibility in public/private sector relationship.

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