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Submitted in Partial Fulfillment of the Requirements for the Degree of [MBA] By Name : Shivani Chouhan Batch: - 2011-2013
Contents
1. Introduction 2. Ecommerce in India 3. Scope of e-commerce 4. Ecommerce and the Government of India 5. Ecommerce in India: Pitfalls in the way of Ecommerce 6. Growth of e-commerce 7. Status of e-commerce in India 8. Facilitators of e-commerce in India 9. Benefits of E-Commerce 10. List of Top E-Commerce Companies of India 11. Bottom of Form Barriers to Ecommerce in India 12. Future of E-Commerce in India 13. Conclusion
Abstract
E-Commerce has unleashed yet another revolution, which is changing the way businesses buy and sell products and services. . E-commerce stands for electronic commerce and pertains to trading in goods and services through the electronic medium. India is showing tremendous growth in the Ecommerce. The low cost of the PC and the growing use of the Internet is one of reasons for that. There is a growing awareness among the business community in India about the opportunities offered by eCommerce. The future does look very bright for ecommerce in India with even the stock exchanges coming online providing a online stock portfolio and status with a fifteen minute delay in prices. . In the next3 to 5 years, India will have 30 to 70 million Internet users which will equal, if not surpass, many of the developed countries.
1. Introduction
As a symbol of globalization and in many ways its leading feature, e-commerce represents the cutting edge of success in this digital age. E-commerce stands for electronic commerce and pertains to trading in goods and services through the electronic medium, i.e. the Internet or phone. On the Internet, it pertains to a website, which sells products or services directly from the site using a shopping cart or shopping basket system and allows credit card payments. It involves conducting business with the help of the electronic media, making use of the information technology such as Electronic Data Interchange (EDI). In simple words, Electronic commerce involves buying and selling of goods and services over the World Wide Web. Customers can purchase anything right from a car or a cake sitting comfortably in his room and gift it to someone sitting miles apart just by click of a mouse.
2. Ecommerce in India
The low cost of the PC and the growing use of the Internet has shown the tremendous growth of Ecommerce in India, in the recent years. According to the Indian Ecommerce Report released by Internet and Mobile Association of India (IAMAI) and IMRB International, The total online transactions in India was Rs. 7080 crores (approx $1.75 billion) in the year 2006-2007 and expected to grow by 30% to touch 9210 crores (approx $2.15 billion) by the year 2007-2008.
According to a McKinsey-Nasscom report the e-commerce transactions in India are expected to reach $100 billion by the 2008. Although, as compared to the western countries, India is still in is its initial stage of development Some common applications related to electronic commerce are the following:
Document automation in supply chain and logistics Domestic and international payment systems Enterprise content management Group buying Automated online assistants Instant messaging Newsgroups Online shopping and order tracking Online banking Online office suites Shopping cart software Teleconferencing Electronic tickets
3. Scope of e-commerce
India is showing tremendous growth in the Ecommerce. Rival tradeindia.com has 700,000 registered buyers and it has the growth rate of 35% every year which is likely to double in the year 2010. Indiamart.com claims revenues of Rs. 38 crores and has a growing rate of 50 every year. It receives around 500,000 enquiries per month. Undoubtedly, with the middle class of 288 million people, online shopping shows unlimited potential in India. The real estate costs are touching the sky. The travel portals' share in the online business contributed to 50% of Rs 4800 crore online market in 2007-08. The travel portalMakeMyTrip.com has attained Rs 1000 crores of turn overs which are around 20% of total e-commerce market in India. Further an annual growth of 65% has been anticipated annually in the travel portals alone.
Home Internet usage in India grew 19% from April 2006 to April 2007. In April 2007 it became 30.32 million and the eMarketer accept that there will be 71 million total Internet users in India by 2011. India is showing tremendous growth in the Ecommerce. Rival tradeindia.com have 700,000 registered buyers and it has the growth rate of 35% every year which is likely to double in the year 2008. Indiamart.com claims revenues of Rs. 38 crores and has a growing rate of 50 every year. It receives around 500,000 enquiries per month. Undoubtedly, with the middle class of 288 million people, online shopping shows unlimited potential in India. The real estate costs are touching the sky. The travel portals' share in the online business contributed to 50% of Rs 4800 crore online market in 2007-08. The travel portal MakeMyTrip.com has attained Rs 1000 crores of turnover which is around around 20% of total e-commerce market in India. Further an annual growth of 65% has been anticipated annually in the travel portals alone.
B2B Transactions
According to Outlook Business magazine (May 20, 2008), the total B2B transactions in India in the year 2008 are likely to be US$100 billion and B2B marketplaces could account for $15 to $20 billion out of that. Indias largest B2B portal Tradeindia, maintained by Infocom Network Ltd, also stated that e-commerce transactions in India show a growth rate of 30 percent to 40 percent and will soon reach the $100 billion mark. In near future, e-commerce is going to play a major role in multimedia, entertainment and fashion industry. The foreign branded companies are eager to take full advantage of the growing Indian market and are trying to create market for their products over the net. Gucci Co. an Italian iconic fashion and leather goods label is eager to make its hold in India with Business to business transactions. Some of the key B2B exchanges in India are tradeindia.com, matexnet.com, Alibaba.com, AuctionIndia.com, Indiamart.com, TeaAuction.com, MetalJunction.com, etc.
B2C Transactions
Although business-to-business transactions play an important part in e-commerce market, a share of e-commerce revenues in developed countries is generated from business to consumer transactions. Railway and Airlines have played a vital role in e-commerce transactions in India. Travel portals are exploding in India. Recently MakeMyTrip.com has shown Rs 1000 crores of
turnover. Travel alone constituted 50% of Rs 4800 crore online market in 2007-08. In India, online services like ticketing, banking, tax payment, bill payment, hotel room booking, entertainment, online games, matrimonial sites, job sites, etc. are showing signs of development in business-to-customer transactions. There has been tremendous boost in the online business with the stock exchange coming online. Online valentine gifts and Diwali gifts are also becoming popular along with the birthday cakes. No doubt, the total value of the B2B transactions is much larger than that of the B2C transactions, because typically B2B transactions are of much greater value than B2C transactions. It seems that the B2C market in India will take time to grow as compared to the B2B market.
Goods should have value for the customer along with quality. Security is promised. Selling Brand articles. Establishing trust and winning confidence.
Providing easy guidance. Clear information regarding delivery time. Articles ordered and the article delivered should not vary. Giving discount offer and other gift items. Limited personal information. Providing value added service at lower prices. Full information regarding the product is simple words. Innovative products. Social shopping phenomenon. Providing price comparison. Transparent information regarding the product. Indian customers want to buy things that do not cost them much.
Consistency in execution. Strong government policy against cyber crimes and frauds. Tight integration of the system by the online retailers. Stating clearly the time required for the delivery of the product and delivering the goods within that time period.
Reduce the time and cost of interaction for the transcationss. Facilitate distant trade with efficiency. Help in the payment procedure. Help the buyers to find new suppliers and place orders with them. Create a safe and friendly online deal process.
Vertical E-marketplace
The vertical e-marketplace is consistent buyer and seller of only one specific industry such as leather, textile, steel, to display information regarding their goods or services.
Horizontal E-marketplace
The horizontal e-marketplace connects buyers and sellers of various industries to display information regarding their goods and services.
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6. Growth of e-commerce
During the year 2000-2001, two major Industry Associations produced separate reports on ecommerce in India. One was prepared by the National Committee on Ecommerce set up the Confederation of Indian Industry (CII), while the other was commissioned by the NASSCOM and prepared by the Boston Consulting Group. Both the reports are optimistic about the growth of e-commerce in India. The Confederation of Indian Industry (CII) report estimates the volume of e-commerce to grow to Rs 500 billion (US$ 10.6 billion) in the year2003. The NASSCOMBCG Report, on the other hand, estimates for the same year that the total volume of ecommerce will be Rs 1,950 billion (US$ 41.5 billion). Amul, a milk cooperative, is successfully using ecommerce to deepen its brand loyalty. Likewise, corporate in the automotive sector are improving their customer relations through this medium. Some of the new names that are rediscovering e-commerce through new portals at relatively low capital cost, without venture capital funding include: Key 2 crorepati, Music Absolute, Gate 2 Biz. The low cost of the PC and the growing use of the Internet has shown the tremendous growth of Ecommerce in India, in the recent years. According to the Indian Ecommerce Report released by Internet and Mobile Association of India (IAMAI) and IMRB International, The total online transactions in India was Rs. 7080 crores (approx $1.75 billion) in the year 2006-2007 and expected to grow by 30% to touch 9210 crores (approx $2.15 billion) by the year 2007-2008. According to a McKinseyNasscom report the ecommerce transactions in India are expected to reach $100 billion by the 2008. Although, as compared to the western countries, India is still in is its initial stage of development. E-Marketer forecasts that online sales will more than double by reaching $168.7 billion in 2011. Market share is moving toward Australia, India and especially China. Chinas share of regional B2C e-commerce will grow more than threefold from 4.1% in 2006 to 14.3% by 2011.At the low end, South Koreas B2C e-commerce sales will grow by 13.3% over the same period. Between2006and 2011, the aggregate CAGR for the five countries will be 23.3%.Fig. 1 sales of selected countries in Asia Pacific Online travel is the largest e-commerce sales category in most major countries. For the same group of five countries, plus New Zealand, online leisure and unmanaged business travel sales totaled about $17.7billion in 2007 and are forecast to rise to$41.7 billion by2011. E-Marketer forecasts that from 2006 to 2011 online travel sales will grow at a 24.8% annual rate, higher than the 23.3% rate for B2C e-commerce. This
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indicates that travel is one of the key drivers of e-commerce sales in the APAC region. Fig. 2 Graph of sales in selected countries In China and India, online-travel spending drives B2C ecommerce sales, and it accounts for a majority of total sales. Consumers are less wary of buying services like train or airline tickets online, and sellers can avoid the logistics and delivery problems associated with physical goods. Jeffrey Grau, senior analyst at e Marketer, said that such preferences underscore how e-commerce in there gion has a vast amount of growth ahead. E-commerce in these markets will have come of age when consumers start buying more expensive, high-touch categories such as apparel, home furnishings and jewelry.
1) Automobiles- On these sites we can buy and sell four wheelers and two-wheelers, new as well as used vehicles, online. Some of the services they provide are: Carre search and reviews, online evaluation, Technical specifications, Vehicle Insurance, Vehicle Finance.
2) Stocks and shares and e-commerce- In India today, we can even deal in stocks and shares through e-commerce. Some of the services offered to registered members are Online buying/selling of stocks and shares, Market analysis and research, Company information, Comparison of companies, Research on Equity and Mutual Funds.
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3) Real estate and e-commerce- They provide information on new properties as well as properties for resale. One can deal directly with developer through consultant. All India services: Housing Finance, Insurance companies, Architects & Interior Designers, NRI services, Packers &Movers.
4) Travel & tourism and e-commerce- India has a rich history and heritage and e-commerce is instrumental, to a large extent, in selling India as a product, encouraging Indians as well as foreigners to see its multi faceted culture and beauty. The tourist destination sites are categorized according to themes like: Adventure -trekking, mountain climbing etc, Eco-Themes pertains to jungles, flora and fauna.
5) Gifts and e-commerce- In the bygone days, one had to plan what to gift a loved one, trudge across to your favorite shop, and browse for hours before purchasing a gift. The gifts are categorized as: Collectibles like paintings and sculptures, Luxury items like leather goods, perfumes, jewelry boxes, etc, household curios and carpets, etc, Toys & games, Chocolates, Flowers, Woodcraft& metal-craft.
6) Hobbies and e-commerce- The most popular hobbies from time immemorial are reading, music and films. The books cover a wide range of topics like Business, Art, Cookery, Engineering, Childrens Stories, Health, Medicine, Biographies, Horror, Home & Garden, etc. 7) Matrimony and E- commerce- It is said that marriages are made in heaven, but in the world of E-commerce they are made on marriage portals One can search for a suitable match on their websites by region of residence(India or abroad), religion or caste. Allied services for registered members: Astrological services, Information on Customs and Rituals, Legal issues, Health & Beauty, Fashion & Style, Wedding Planners
8) Employment and e-commerce- Two major portals likewww.Monsterindia.com and www.naukri.com (meaningjob.com in Hindi) are instrumental in providing jobseekers with suitable employment at the click of a mouse .The service for job seekers is free and
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for Employers they charge a nominal fee. Jobs are available online in fields ranging from secretarial to software development, and from real estate to education
B. Banks: 1) Net banking/phone banking: This is an online banking facility available for savings account holders as well as current account holders. Some of the special Net banking services are: Demit accounts for sale/purchase of stock sand shares, Foreign Exchange services, Direct/Instant payment of bills on the account-holders behalf, Financial Planning & advice, Electronic Funds Transfer, Loans to account-holders.
2) Credit/Debit Cards- Banks facilitate E-commerce by providing the most vital trade instrument, namely the Credit or Debit Card, without which E-commerce would be impossible
9. Benefits of E-Commerce
There is a growing awareness among the business community in India about the opportunities offered by e Commerce. Ease of Internet access and navigation are the critical factors that will result in rapid adoption of Net commerce. Safe and secure payment modes are crucial too along with the need to invent and popular izeinnovations such as Mobile Commerce. India Reports provides accurate and easy to understand India specific reports that capture trends, map business landscapes and custom-made reports for specific needs. The other reports available on India Reports are on retail, outsourcing , tourism, food and other emerging sectors in India. Easy reach to a fast growing online community
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Unlimited shelf place for products and services Fuse the global geographical and time zone boundaries Helps reach national and global markets at low operating costs.
Research studies have indicated several factors responsible for the sudden spurt in growth of E Commerce in India such as:
a. Rapidly increasing Internet user base b. Technology advancements such as VOIP (Voiceover-IP) have bridged the gap between buyers and sellers online c. The emergence of blogs as an avenue for information dissemination and two-way communication for online retailers and e Commerce vendors d. Improved fraud prevention technologies that offer a safe and secure business environment and help prevent credit card frauds, identity the stand phishing e. Bigger web presence of SMEs and Corporate because of lower marketing and infrastructure costs. f. The young population find online transactions much easier
Expanding or opening an eBusiness can create a world of opportunity and helps to establish new relationships with potential customers, potential business associates and new product manufacturers. Just by being in an easy to find location that is accessible to users all over the world, you will be available for others to find and approach you about new opportunities. Customers who don't know you exist will know about you, product suppliers will request you add their items and other businesses will approach you about partnership opportunities. Many of these opportunities would not present themselves without an Online presence or site for them to discover you on their own.
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An eCommerce site basically gives you the ability to have unlimited store hours, giving your customers 24 hours a day, 7 days a week access to shop and buy items from you. Some merchants choose to limit their hours to 5 days a week, but orders can still be made over the weekend and customers can still make contact 24/7 via email, phone or fax. In addition, the costs associated with having your store open 24/7 are much less than maintaining a physical storefront or phone operator with 247 operation capability. You can literally take orders and let customers shop while you sleep, take vacations or from remote locations.
Having an Online business means that you can literally reach out to millions of consumers looking for what you sell anywhere in the world. By reaching out to new markets and displaying your site prominently in front of them, you will be able to help increase your company/domain brand name and also increase awareness about your product line. By giving users 24/7 access in an easy to find location, you will help to create more word of mouth buzz for your eBusiness, in turn helping to promote your brand name and products. Users who haven't heard of you will discover you exist and help spread the word about you.
An eCommerce storefront will help create an easier means for your customers to purchase the items you sell and offers a unique way to display and describe your products in a informative, visual and interactive way. The customers you have will become more loyal shoppers each time they visit, making eCommerce great for improved customer satisfaction and visitor loyalty. Now that you offer your products for sale Online, consumers will be able to shop from your catalog more easily, get updates on new items or product discounts and can shop or buy anytime they wish
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An eCommerce store that is an extension of a physical storefront is a great way to boost overall business sales and potentially increase company profits across the board. Companies who already do business from a physical location are typically unaware of how much more they could be making if only they were to expand into their Online marketplaces. Selling Online opens up many opportunities for businesses both new and old. It's a great way to increase sales, especially if you already have a physical store.
As mentioned above, opening an Online extension of your store or moving your business solely Online are great ways to boost sales and potentially profits. Remember, just because SALES increase it does not necessarily mean that company PROFITS will increase also. Online businesses do have a greater chance of increasing sales and profits by opening up an eCommerce store to sell the items they offer. Sales and profits are the lifeblood of any company, so it makes sense to increase them where ever possible and whenever possible throughout the existence of your company. More sales, more profits, bigger budgets, etc.
In addition to potentially increasing sales and profits, eBusiness owners can also typically reduce the costs of running their business by moving it or expanding it into the Online world. eCommerce stores can run with less employees including sales staff, customer service reps, order fulfillment staff and others. eBusinesses also do not need a physical location in order to stay operational, which can reduce costs related to building leases, phone bills, utility costs and other costs associated with running a brick-and-mortar storefront.
As mentioned, owning an eCommerce business typically means no limits as to who and where you can sell your products. Some countries outside the United States have additional regulations, licensing requirements or currency differences, but generally you will not be limited on the
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customers you can reach out to. Physical storefronts are limited to the city in which they are located, Online businesses aren't limited unless you put geographical limits in place. At the very least, you should consider targeting U.S. buyers, but also consider, Canada, UK, Australia and others. Sell to anyone, anywhere, anytime!
Although your customer reach may expand beyond your local area, you may only wish to target smaller consumer markets and buyer niches for your eCommerce products. Owning an Online store gives the merchant much control over who they target and reach out to notify about the items for sale in their store. Currently, you can target women, men, a generation of users, a particular race and many more smaller niche markets. This is typically done by placing keywords that those niche markets use on a regular basis when shopping for the items you offer.
An Online store and Web brochure are great ways to deliver and display information about your company and the products you sell. With an Online presence your customers will have direct access to product information, company information, specials, promotions, real time data and much more information that they can easily find just by visiting your site day or night. Not only does it benefit your customers, but it's also generally easier for merchants to update their site rather than break down an in store display and put up another for the next event. It saves both your customers and you precious time and can help you to plan more updates or better sales as it will be much easier for you to update and take down.
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2) Candid Info: This Indian E-commerce company is based in New Delhi .it is a renowned Offshore Outsource Web designing development e-commerce Company. It offers off shore web development, designing, and SEO solutions for large corporations and SME's.
3) Chenab Information Technologies Private Limited This E-commerce company in India comprises of web enabled business and web bases services, airline and security systems by using the internet technologies and tools of the state of the art. The company has three Software Development centers in Mumbai and the overseas branch office in New York. It is the first software company across the globe to get the certification of ISO 9001:2000.
4) Euro link Systems Limited: This leading E-commerce company provides consulting and e-business solutions, Flex TCA Systems, Trillium Protocol services to the global community. The company has its office in England, U.S, Switzerland, and India with about 200employee strength.
5) Hash Pro Technologies: It offers e-business and traditional analysis, development, implementation, design and strategic planning. It is a leader in the provider of integrated talent management software organization in India. It is key technology consulting provider. It renders services like the E-commerce Hosting, Internet Market in gand Human Resources. The e-Workforce initiative of the company will enable the company to become a 100percent e-Corporation.
6) Compare Info Base The company is leading provider of e-commerce portals and IT solutions. The company manages about 1500 websites and portals with 4000domain names. It has web presence in Maps, Software Development, GIS Travel, Education, Media, and Greetings etc. It specializes in
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Content development services, Website development services; PHP Programming & Development etc. It has its office in Mumbai, Kolkata and Delhi.
7) Sarver E-solutions: This company is based in Mumbai. They believe that Information Technology is a way to the business objectives. It is a IT consulting and Solutions Provider which offers personalized and personal business solutions using Information and Communication Technology.
8) Planet Asia: This E-commerce company in India use struck record and deep experience in externalized applications to produce high quality B2SPEC(Business to Partner, Supplier, Customer) solutions to global enterprises.
9) Candid Web TechnologyThis fast growing E Commerce Company in India is a provider of Complete Web Solutions for the design and development of dynamic web sites .The clients of the e-commerce company spans from the small scale companies to corporate organizations.
10) Tricot Design: Tricot Systems is a software services company that offers solutions exclusively on the Microsoft Platform to customers worldwide. 10 years of experience on the Microsoft Platform puts the company at the forefront of .Net Technology. We invite you to explore our website and we look forward to helping your business unleash its potential.
Some of the infrastructural barriers responsible for slow growth of e Commerce in India are as follows. Some of these even present new business opportunities. A. Payment Collection: When get paid by net banking one has to end up giving a significant share of revenue (4% or more) even with a business of thin margin. This effectively means y parting away with almost
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half of profits. Fraudulent charges, charge backs etc. all become merchants responsibility and hence to be accounted for in the business model.
B. Logistics You have to deliver the product, safe and secure, in the hands of the right guy in right time frame. Regular post doesnt offer an acceptable service level ;couriers have high charges and limited reach. Initially ,you might have to take insurance for high value shipped articles increasing the cost.
C. Vendor Management: However advanced system maybe, vendor will have to come down and deal in an inefficient system for inventory management. This will slow down drastically. Most of them wont carry any digital data for their products. No nice looking photographs, no digital data sheet, no mechanism to check for daily prices, availability to keep your site updated.
D. Taxation: Octopi, entry tax, VAT and lots of state specific forms which accompany them. This confusing at times with lots of exceptions and special rules. can be
H. Multiple issues of trust and lack of payment gate ways privacy of personal and business data connected over the internet not assured; security and confidentiality of data not in place. I.
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12.Conclusion
A developing country can become industrialized and modernized if it can extensively apply IT to enhance productivity and international competitiveness; develop ecommerce and e-governance applications. An information-based society or knowledge based society is composed of IT products, IT applications in society and economy as a whole. Many countries in Asia are taking
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advantage of e-commerce through opening of economies, which is essential for promoting competition and diffusion of Internet technologies. Large enough to have a critical mass of 10 to 20 million users to be able to make an impact on e-commerce and e-governance. In the next 3to 5 years, India will have 30 to 70 million Internet users which will equal, if not surpass, many of the developed countries. Internet economy will then become more meaningful in India. With the rapid expansion of internet, ecommerce, is set to play a very important role in the 21stcentury, the new opportunities that will be thrown open, will be accessible to both large corporations and smallcompanies. The role of government is to provide a legal framework for E Commerce so that while domestic and international trade are allowed to expand their horizons, basic rights such as privacy, intellectual property, prevention of fraud, consumer protection etc are all taken care of.
REFERENCES
[1] Sinha (April 2009), Ecommerce in India The RealChallenges
[2] Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). E Business and e-Commerce Infrastructure. Mc Graw-Hill.
[3] Frieden, Jonathan D.; Roche, Sean Patrick (2006), "ECommerce: Legal Issues of the Online Retailer inVirginia", Richmond Journal of Law & Technology,13(2). [4] Miller, Roger (2002), The Legal and E-Commerce Environment Today, Thomson Learning, pp. 741 pages. [5] Turban E, Lee J King D and Chung H M (1999),Electronic Commerce: A Managerial Perspective,Prentice Hall [6] Ubois, Jeff (1995), Wheels of Commerce- an Interview with commerce, pp 62-69 [7] Megna, Michelle (2008); E-Commerce Trends for2008 and 2009.