E-COMMERCE UNDERSTANDING: A STUDY of COMPETITIVE ECONOMY Dr. Manoj Raghuwanshi
Associate Professor, Acropolis Institute of Management Studies & Research, Indore Dr. Jalaj Katare
Associate Professor, Acropolis Institute of Management Studies & Research, Indore Abstract - E-commerce began to gain popularity in India as the number of internet users and smart phone sales increased. However, while e-commerce has grown in popularity among roughly 30% of city dwellers over the years, purchases through e-commerce have not increased at a faster rate due to a lack of product choice and standardisation. Because of the small range and to ensure consumers that their transactions are cost-effective, only a limited number of branded products are on sale, with the provision that e-commerce promises after-sales support and product quality.
Financial literacy, standard of living, nature of residence, payment system (digital vs. cash), and, most importantly, up-scaling of manufacturing enterprises are all factors that influence e-commerce development. Daily-use goods tend to be the least prevalent in the e-commerce mode, with only the more branded and personalised but standardised products being more popular.
1 INTRODUCTION
Since large countries cannot provide every firm with a required piece of land or issue credit from organised financial institutions, large countries are generally expected to accommodate the labour force in the unorganised market. In India, the manufacturing and service sectors have seen a dramatic change from small scale and tiny outlets to booming businesses backed by corporate culture.
Since 1991, when economic reforms were implemented, the Indian economy has expanded significantly, resulting in overcrowding in the cities where the state's economy is concentrated. Due to state constraints in developing each city fairly due to a lack of capital, it has been observed that a few select cities have emerged as growth centres.
In Haryana, for example, before economic reforms, the flourishing company was in Panipat, but now Gurugram has surpassed all other cities in terms of growth in business opportunities and job creation. It is a hard reality that as cities expands, civic facilities grow as well, but on the flip side, several small colonies spring up to fill the gap, as these are needed for low-wage jobs.Jobs begin commuting from backward states to advanced towns, and cities become a source of attraction for them. It has been noted that as a city begins to expand, it extends its scope, making it difficult for law enforcement authorities to track crime, and traffic
management is also cumbersome. As cities expand, more space for shopping malls and commercial centres is needed to allow people the freedom to spend their money on whatever they want.While large shopping centres have been built, as cities become more populated, the amount of time spent on the roads and the hassles associated with parking are raising the pressure on customers to bear additional costs and strain. It has been noted that mall outlets face competition and are often unable to keep their prices stable. When the business begins to go downhill, it becomes unprofitable, and the stores are sold off.
In several respects, the Indian economy is exceptional. Consumers in India are organised in a hierarchical system. Consumers come from all walks of life, including the upper crust, the upper middle class, the middle class, and the lower crust, but the uniqueness of Indian shopping malls is that they provide outlets for people of all income levels to maximise their earnings. Over time, it has been observed that the exclusivity of certain outlets has given way to inclusivity, as they prefer to provide a diverse selection of goods. Second, the outlets are supposed to physically display all of the items needed by the customers, but despite the outlet's extensive range and selection, the customer had to leave empty-handed.
The purchase of spectacles and other fine products such as jewellery, for
example, is an obvious example. Some companies' high-end investments and advertised advantages have attracted a large number of large buyers. It is not necessary to provide proof that once a company has established its credibility and loyalty, it will attract customers who trust them. There are several items of low to moderate value that, when purchased, require a considerable amount of time and travel to a particular location in order to obtain. On the opposite, there has to be a less coercive way to procure them.
Standardization, technical savvy, and rational pricing are just a few of the factors that have helped countries improve remunerative employment and achieve the necessary level of competition.
India lags well behind the United States and China in terms of product standardisation, which tends to be due to the broad customer base's dispersed demand. In India, a large portion of the population has migrated into the middle class, which is driving the country's high consumption growth. Another significant argument is that if consumers have a strong desire for luxury goods, their purchasing habits for other things are also different. Different forms of buying tend to have replaced the high-end shoppers that used to go to the market as an exclusive segment two decades ago.
Over the last two decades, students and families have begun to migrate away from their hometowns to work in various locations. They take time to become acquainted with the market places in the early years, and they often face transportation issues; in such situations, everyday needs are met via the internet. It is for this reason that the most e-commerce-friendly cities are metropolitan and cosmopolitan. The government has been emphasising start- ups in recent years in order to involve young entrepreneurs in their own style of entrepreneurship, and once they have matured in the production of the product, the chain effect can be realised, resulting in many more people finding jobs. Since the programme is funded by the government, the start-up in India is doing extremely well. The most significant explanation is that any user wants to save money on distribution and logistics, which are typically much higher than conventional methods because packaging,
display, and spoilage are added to the price charged to customers. Even if the Maximum Retail Price is stated, there is a secret margin for everyone involved in the supply chain. The supply chain in India is excessively long since goods are routed from different points to the final customer. The items travel from place to place and are stocked in some locations, which adds cost to the stockiest or dealer.
In some situations, the products become obsolete or outmoded, which adds to the unrecoverable cost. In e-commerce the stock is converted into flow with minimum losses. E-commerce goods are usually standardised, numbered, packaged, and marketed. These are the unspoken preconditions since consumers are believed to be risk-free when switching from conventional to online shopping. Customers become convinced over time that their purchase would be acceptable in terms of quality and price charged. Although quality and price are soothing, the savings to the consumer come from preserving product flow and reducing supply points where margins are high. The only difference is that in large cities where demand is high, stockiest for each product should be available.
Otherwise, costs would be higher in low- demand areas, and demurrage would be higher. When goods become obsolete and near their expiration dates, a rapid discounted selling starts, leaving both the seller and the buyer in a state of confusion about profit and price. In comparison, as major investors get interested in e-commerce, they make every decision and are in close touch with the manufacturer about potential plans to change or replace the goods. As a result, not only is inventory size regulated, but so is the amount of money locked up in case orders are uncertain. Many questions have arisen time and time again, in which brick and mortar shops, which number nearly 40 million in India, have found themselves in deplorable circumstances after protesting that deep discounts provided by e-commerce suppliers are harming their sales and making survival difficult. In response to the plight of traditional shops, the government has released a variety of loose regulations.
However, there is no question that brick and mortar retailers are pleased with the types of sales they are making, the
majority of which are not possible through e-commerce, and they are satisfied with the consumer split between those who would shop in a brick and mortar store and those who would shop on an e-portal.
Second, despite of the fact that the focus has been placed on paying via digital mode or online payment, the lower income community tends to pay with cash while making purchases. Many people who aren't especially tech-savvy are still avoiding or disliking the conventional existence of e-payment. People in their eighties and nineties have a hard time doing it. However, placing an order is a one-time process, with the remainder being the physical delivery to be received.
As a result, all cash and digital payment forms are equivalent.
2 LITERATURE REVIEW
Growth in Omni channels, niche companies, mergers and acquisitions, tapping more rural markets, rise in internet marketing, emphasis on utilities, rise in digital payment modes, better infrastructure, and supply chain management are some of the developments predicted by Khosla and Kumar (2017) in their analytical study.
Mahipal, D., (2018) discusses the evolution of the internet from 1995 to the present day. Furthermore, the study concludes that tremendous growth would occur in the coming years if the legal system and e-commerce are secure, allowing domestic and foreign trade to expand. Kumar, N. (2018) predicts a fourfold increase in e-commerce by 2021 compared to 2015. Smartphone and internet users will be major contributors to this development, as will an increase in public knowledge, improved internet access, digitalization of most initiatives with government support, entry of international investors and business players, and advanced payment options accessible to customers. However, the government must take measures to provide a proper legal framework and reduce legal risks. According to Seth, A., and Wadhawan, N., (2016), retailers must expand their horizons in order to be competitive with the modern digital business age. Digitalization is no longer an option; it is now a standard for all retailers. This might include changing business models, integrating technical
investments, and becoming more tech- savvy as new developments are made.
According to R. Shahjee (2016), e- commerce has provided a forum for businesses to view their diverse goods and for customers to quickly identify products of interest, which was previously difficult to do through conventional marketing. On the other hand, e commerce is having a lot of problems due to infrastructural limitations and a lack of computer and internet awareness among consumers, especially in rural areas. According to Shettar, M. (2016), proper awareness and understanding of the legal system, as well as potential problem and risk management, is now needed for companies. India's burgeoning e- commerce sector has also piqued the interest of international players. When the number of SMEs, FDI, and MNCs increases, so does the number of work opportunities available to customers, growing their purchasing power.
1.1 Objectives
1. To recognize the e-commerce trend over the last decade.
2. To examine the most common e- commerce items.
3. To determine the length of the supply chain
4. To investigate the e-commerce investment trend.
3 RESEARCH METHODOLOGY
Secondary sources provide information on the essence of e-commerce goods.
Secondary data on the growth of e- commerce in cities is also available. The government's rules for foreign investment should be reviewed to see if brick-and- mortar stores are under pressure from direct investment, which is responsible for keeping prices down and giving high-end investors a lot of negotiating power. Out of a population of 444 million, urban India has more than 390 million internet users (as of December 2018). (as per 2011 census). Rural India, with a population of 906 million people, has more than 213 million internet users, according to data from December 2018. Consumers in Tier 2 and Tier 3 cities have high expectations for branded goods, but have restricted access to them. As a result, customers in these cities are heavily targeted by e- commerce. Electronics industry seems to
be contributing majorly in this industry, with nearly 48% of the share. Apparel industry is second most contributors with 29% share. While the rest 23 % catering to others like beauty, personal care, baby products, home furnishing, books etc.
In the next five years, the e- commerce retail logistics market is expected to grow at a rate of 36%. The majority of shipments are handled by associated arms of large retailers and their in-house logistics, which is followed by e-commerce-focused Logistics Service Providers (LSPs) and some other Traditional LSPs.Key Players of the market Amazon, Snapdeal, Flipkart, Myntra, Nyka, Jabong, Ebay, Shopclues.com With the back ground given the e-commerce in India hinges on the variety of factors. Though e-commerce is becoming popular everyday but its size is not as large as ought to be in relation to size of the population. E-commerce in the last one decade has shown tremendous growth. Payment systems, targeted range, restricted choices, and replacement and delivery timings are only a few of the restrictions that come with e-commerce.
Without a doubt, e-commerce has grown dramatically over the last 10-12 years, but the rate of growth has not been particularly impressive. E-commerce is used when a customer is too certain about his or her choice and prices to accept market prices.
When shopping in physical stores, there are numerous products from which to choose. He would be hesitant to purchase from an e-commerce platform until he is confident that this is his final decision. Certain products enter the market for the first time, and the supplier does not want to sell them through ordinary outlets until their popularity grows. To reduce the cost of the sale as it passes through various stores, the direct benefit has been given to the customers to try and come up with an opinion, and once word of mouth popularity grows, the products will follow. Customers are enticed with cash back if they transact with a specific bank in order to build consumer trust and also to raise the savings base of specific banks. With e- commerce becoming a more common form of payment, banks are gaining the advantage of being able to connect customers to them for future
transactions. The highest e-commerce sales are made in metropolitan cities, with Delhi being one of them. One significant benefit of e-commerce is that products with a rapidly approaching expiration date cannot be sold. The explanation for this is due to the design method. Since e- commerce firms are expected to save money by not short-circuiting the supply chain or distribution network, they source directly from companies or whole-sale dealers, where old stock cannot be kept for long periods of time due to stocking and high inventory costs. Since the commodity is going across the distribution chain and could be nearing expiration, the risk of a consumer being defrauded is very high.
Even if goods are placed on sale when their expiration date passes, their longevity after that date cannot be guaranteed. Many goods can have a two- year expiration date, but by the time the last month of the term has passed, the product's life has nearly expired. It is also possible for retailers to sell used goods within India. In this situation, the customer is concerned, as if he has been seriously defrauded. Without a question, the consumer has the option to save from discounts within the specified range, and a truncated distribution channel where the cost of goods continues to rise from one point to another, but e-commerce is still possible in very restricted pieces.
Second, it is the availability of space and time that allows e-commerce to become a viable means of purchasing. The majority of the large distributors are located in the capital cities, where the goods are delivered for the first point of distribution;
the likelihood of a sale through e- commerce is decided by chance.
4 FINDINGS
Factors behind e-commerce growth in India
a. Digital transactions that do not need cash
b. Increased investments in logistics, wholesale retail, and market share growth by major retail brands.
c. Increased e-commerce amongst companies.
d. Artificial intelligence is used to make Internet content accessible in local languages.
e. Product demand is increasing in non-metropolitan areas.
f. Warehouses and logistics for online retailers are expanding.
g. Mobile commerce is on the rise.
It has been discovered that the density of the area, the quality of the commodity, and whether or not a digital mode of payment is available all influence the probability distribution of e- commerce. If the area is heavily populated, the likelihood of a consumer wanting to purchase a specific product if he is already certain to buy it is less than 1/10. The likelihood of a consumer using a digital mode of payment is 1/20, and the quality of the product likely to be chosen is 1/50. As a consequence, the cumulative likelihood of all the variables is 1/1000.Since the younger generation prefers to keep plastic money or use a digital payment system, e-commerce has grown in popularity in the last ten years.
Customers with a lot of capital use currency notes as a last resort. In India, only 5% of goods are standard, and only 5% of sales are standard. Many authors have pointed out that unless people begin moving from low to middle to high income groups in a calibrated manner, production quality will be impacted by demand and supply conditions because of numerous impediments, the government was unable to obtain FDI in multi-brand retail.
Approximately 4 Crore people depend on their earnings from mom and pop stores, with 97 percent of people purchasing their products from them.
Although the government is willing to attract investment in multi-brand retail, it has had to deal with the wrath of these establishments. These stores had 95 percent unbranded merchandise, while branded merchandise, which tends to be higher in content, becomes unaffordable.
In the case of cerelac, which is used by infants and children up to the age of one year, only 5% of the population consumes it. These can be accessed via e-commerce since it removes the option for customers to move to another product.
Similarly, if a student wants to purchase a computer and is certain that he will buy an HP model, and that the price per configuration is known to him, he would prefer to place the order through e-commerce delivery. Second, since an e-
commerce business is required to uphold high standards of ethics and discipline, the chances of a false or faulty product are slim. Finally, branded goods come with a long warranty and excellent after- sales support. Electronics, clothing, and beauty products from standard manufacturers and branded products have recently seen a spike in e-commerce sales. When a product is standardised and personalised in terms of configuration and size, placing an order for it with 100 percent trust is more authenticated than if the same consumer goes to a convenience store, where there is no need to go unless he wants to waste time and end up buying the product of the second and third order.
5 CONCLUSION
The popularity of e-commerce is directly related to the manufacturing sector's scaling up, which, once achieved, leads to standardisation and branding. The desire to conduct business through e-commerce drives demand for digital payments, and thus financial inclusion becomes a corollary of the e-commerce theorem.
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