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Comparing Study of E- Retailing and Traditional Retailing & Merits/ Demerits of E-Retailing

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Marketing on the Web; a Part of E-Commerce
Marketing on the web is a part of E-Commerce/E-Business or electronic commerce. E-Commerce has already revealed its potential across the world. In fact, it has come to be described as the biggest development in the commerce since the invention of money. Powered by the breakthroughs in IT and telecom, and the rapid growth of Internet, E-Commerce is already changing the way people work, buy and live. E-Commerce involves the exchange of products, services, information and payment through electronic medium of Computer/Networks. In the other words, ecommerce means business done online. E-Commerce results when a firm connects its business systems to its customers, distributors, vendors and suppliers-via intranet, extranets and the Internet/web. E-Commerce is the umbrella term for the entire spectrum of activities such as Electronic Data Interchange (EDI), electronic payment system, order management, information exchange and other business applications, with electronic/paperless documentations.

The Components of Web Marketing
Business to Business (B to B) and Business to Consumer (B to C) ecommerce constitute marketing on the web. They correspond respectively to  Marketing to Business Buyers.  Marketing to Ultimate consumers. The both of the components are equally important; a greater part of the challenge of the web marketing lies in the second component. In fact, over the long term, more of the opportunities too lie in this component.

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Benefits of Web Marketing
The web constitutes a reliable, readily accessible and inexpensive means of bringing together buyers and sellers, large and small, right across the globe. With web marketing, the market comes to the doorsteps of the consumer. Basically, web marketing has all the plus points which Direct Marketing (DM) has. After all, it is one of the Direct Marketing. Benefits the Seller as well as the Consumer: Web marketing confers significant benefits on the seller as well as the buyer. It is a true win-win proposition.

Benefits the seller
 Access to all markets : With the marketing, a marketer located in any part of the globe can compete in the markets of the whole world. The web enables firms/marketers to free themselves of the inherent limitations of their existing geographic mooring location. Opening a website is the equivalent of opening a marketing office, which anyone in the world can access, readily and instantly. In the other words, it is equivalent of opening branches everywhere in the world. Enable even small firms attempt global marketing – Web marketing enables even small firms to access the markets of the world. It makes it affordable for them. With a website even a one-man enterprise – one that manufactures some herbal shampoo in some remote place in India for example – can sell its products and services anywhere in the world and at a low marketing cost.  Scope for Unimpeded, Constraints-Free Growth: With web marketing, a business can grow unimpeded by the various constraints that normally delimit the growth under conventional marketing. Limitations of showroom/retail shop space, warehouse space, sales staff and other resource do not choke a business in the web marketing. Manufacturers/Marketers can carry on their operations on the web with just one central warehouse and a small team of staff.

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 Scope for enhancing Customer value and customer service: Being an interactive medium and a platform for innovation, the web presents great opportunities to the seller to enhance customer value. Helps offer many services and products from a single stop – A web marketers can offer a variety of services and products to the customers from a single websites, a single stop on the net. Also, depending on the actual needs of Benefit to the seller – the customer, he can deliver supplementary services to him. Even Access to all markets. where the services demanded are Renders global marketing feasible for even small outside his involvement, he can still firms. serve the customer by providing him a path for getting to the agencies that are Helps unimpeded and constraints-free growth. in a position to provide those services. Scope for enhancing customer value and He is able to do this because the web customer service. provides him a direct and interactive o Helps offer many services and products access to the customer.
from a single stop. o o Helps target the customer individually. Imparts speed to all responses; and the speed becomes a source of customer value.

Helps building ‘relationship’ with customers. Helps reduce costs o o o o Business costs Marketing costs Channel costs Communication/promotion Costs

Enhances marketing productivity Keeps sales people together electronically and enable them work as a team in serving the customers. Allow companies to functions like beehives Enables to adjust quickly to market condition. Flexibility in marketing communications too.

Helps target the customer individually and customize the offer – The web also helps the marketers target the customer individually, because of the facility of direct, interactive and online communication with them. The marketers can easily gain all essential knowledge about the consumers, wherever in the world they may be located. He can also provide from his side an uninterrupted flow of information to the consumers. In mass marketing, it is difficult to target the customer so precisely. Targeting customers individually helps to provide tailor-made products and personalized services to them. Imparts speed to responses; and speed becomes a customer value – In modern times, speed has become a

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A mass medium as well as a personalized medium.

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major ingredient of successful marketing. For example, Speed in order processing, sales/distribution and service has become important. So is speed in these and other such aspect has become a major source of customer value and hence an important source of competitive advantage to a marketer. The web helps achieve speed and thereby helps enhance customer value.  Helps Build ‘Relationship’ with customers: Like other marketing methods, web marketing also helps build ‘relationship’ with customers. Being totally interactive and one-to-one marketing, web marketing is more effective in this respect compared to other forms of Direct Marketing. With the web marketing, the marketers can interactively elicit a lot of information about the consumer. This helps him to offer customized products, customized services and customized incentives. It also helps offer demos of specific products, which a particular customer may want.

 Helps Reduce Costs: Business/Transaction Costs – Since web marketing conducts business processes and transactions through real time interactions using electronic media and paperless technologies, it significantly reduces the cost of producing and processing an invoice in web marketing is less than one-tenth of what it costs to process it in conventional marketing. Moreover, as the web reduces the order processing time as well as the cycle time of the various business processes, it reduces total business costs. Using the web is the cheapest method of answering a customer request. Channel Costs – Channel costs, which are a significant part of marketing costs, are reduced considerably when a product is marketed through the web. As mentioned already, in web marketing one need not maintain a vast network of showroom or employ an army of sales staff. This also reduces or ignores costs of rent, insurance, utilities as well as sales personnel. Communication/Promotion Costs – Communication/Promotion costs, which are another major part of marketing costs, can also reduced in web marketing such as enables gaining worldwide communication at a low unit cost.

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Savings in the marketing costs also come from faster movement of inventory, quicker order execution and faster realization of money. Web marketing also generates valuable sales leads at zero cost.  Enhance Productivity of Sales People: Web marketing also makes marketing/ sales people more efficient and productive. Since basic transactions are taken care by computer program, sales people are free to devote their time for more meaningful tasks, leaving the Management Education on the Net – mechanical transactions to the net. Macmillan India and IIM-C Web marketing keeps the staff together Publishing house, Macmillan electronically and enables them to work as a team in India ltd, offers management serving the customers, sharing ideas and information development programs on the freely. This leads to higher productivity. Internet in collaboration with
IIM-Calcutta. This is the first exclusive online executive execution education program in India. The delivery of the program is digitized and is accessible through a portal. The program is a separate entity and not a part of other management development courses offered by the institute. Executives across the world can undergo management training through this program. The program has built-inflexibility. It could be comfortable in a period ranging from week to a month.

Allows Companies to operate like beehives – The web allows information to be shared horizontally. Information need not travel up to the CEO’s office and then back travel down to reach the others. In the conventional setup, an identified person will be in charge of the information. Such a thing does not apply in case of the Internet. Everyone has ready access to the information.

 Enables the Marketers Adjust o Market Conditions Quickly: Marketing on the web enables the marketers to adjust fast to changing market conditions. They can quickly know what the market want and offer it. For example they can add products to their basket, Alter prices, enlarge services and fine-tune their offering with greater speed.

 A Versatile Medium of Communication: As a medium of communication, the web is a versatile tool indeed. It is the equivalent of a combination of several media – newspaper, magazine,
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billboard, radio, telephone and TV. Second, Web marketing allows flexibility in marketing communications; it allows the marketers to adjust the size and other attributes of his medium – the websites – at short notice. Conventional media, like print or broadcast, do not lend for such quick adjustment. Moreover, with the web there is no upper limit on advertising space, in contrast to other media.

Benefits the Consumer
For the consumer, convenience, scope for informed and competitive buying, search advantage and wider options, customized and personalized products and services, greater transparency, and greater bargaining power are the main benefits of web marketing.

 Convenience: First, sitting at home, the customer can purchase the products and services. He can escape all the hassles involved in conventional shopping, which include a physical visit to the shop. More importantly, he can escape the frustration involved in Dell computers going all the way to the shop just to Dell Computers sells its custom-made PCs know that the product he was looking to the customers on the websites. The for was not available there at all. consumer has to log onto the Internet, visit Second, he can order his requirement the Dell website, select his specifications and place the order, keying in his credit at any time – day or night – and from card number. Dell delivers the PC at the wherever on the globe he is located. customer’s doorstep within a few days of Third, he can have a complete placing order. Interestingly, only after a online interaction with the marketer; consumer thus places an order on the web, he can have an online demonstration does Dell commence the assembling of the of the product; he can place an online customized PC. Now, Dell sells computers order; he can also pay online and worth $10 million in this fashion every day. complete the whole purchase process on the web. In short, he can shop privately, conveniently and swiftly.  Scope for Informed and
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Competitive Buying: Scope for informed buying is the second major benefit from web marketing for the consumer. The web offers him access to a great deal of information about the products and services he is looking for. Search advantage and wider options – In conventional shopping, consumers stop with limited searches. They visit four or five outlets at best before deciding on the brand to be bought. They conclude that the benefits of extended search will be just incremental. And, the search is quiet tedious. With web shopping, the situation is different; for high value purchase in particular, extended search often proves highly beneficial. It throws up a large number of options and the search is hassle free. There are softwares that create menu-driven dialogues, which simplify the job of searching and finding the alternatives. In short, the web provides great ‘search advantages’ to the consumer.
Benefit to the Consumer –
Convenience. Scope for informed and competitive buying. Search advantage and options. Consumer can actually bargain on the net with a host of sellers. Can get ‘more for less’ Transparency Accuracy Shifting of the power equation in favor of the consumer.

Consumers can bargain on the net with a host of sellers – Most importantly, because of the interactive nature of the web, the consumer can actually bargain on the net with a host of sellers and get the best price and terms. He can compare a multitude of brands – feature by feature – and their prices, and secure the best deal. Sophisticated search engines on the web come to his help in this regard.

Consumer can get ‘more for less’ – With web marketing, consumers can get more value for their money. As a rule, web marketers make competitive offers to the customers, voting for a policy of giving ‘more for less’ in value -price equation. They do so largely because they know that in a borderless e-commerce world, consumers are in a position to buy from anywhere, wherever they will bet best price and value. Transparency – Web marketing also provides for a very high degree of transparency, which was hitherto unknown in business transactions. There is no
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suppression of information. By browsing through the web, buyers can become aware of just about all sellers selling the particular product and their prices and terms. Accuracy of information – Accuracy of information regarding schemes, discounts and validity guarantees are all available and this actually makes him want to buy more.  The Power Equation Shifts in Favor of the Customer: In short, web marketing actually alters the power equation between the marketer and the buyer, in favor of the latter. In conventional marketing, marketers (retailers) concentrate more on supply side and take the consumer for granted. They assume that the latter will take the trouble of coming to their store as long as the stores are well stocked. With the web marketing, Rediff- On-The-Net they can no longer go by Rediff-On-The-Net is one major independent web this assumption. They have marketer/e-retailer in India. to woo the consumer.
Rediff-On-The-Net has launched a direct-to-home web service covering a limited range of products, such as books, music discs and cassettes. Buyers can log in, order the products and get them delivered at their doors.

Rediff-On-The-Net started as a web design company and graduated rapidly into a full-fledged web-marketing firm. By early 1999, the site had become the most popular Indian website, with about 50 million hits a month. And by late 1999, the number of hits had gone up to 80 million per month. It claims that their security systems are among the best in the world, at par with the likes of Amazon.com it has tied up with IT majors like IBM and Intel for technology. At Rediff, buyers can pay either through credit card or by VPP. Like all e-retailers, Rediff does not stock the products it sells. Instead, it has worked out tie-ups with book publishers and music companies. On receiving an order on the web, it gets the creditworthiness of the purchaser/music marketers and delivers them to the customer through an express company. It has tied up with FedEx and Blue Dart for this purpose. Rediff has by now built a reasonably loyal band of surfers. It has started moving on to the next step–to get the surfers to visit its sites consistently.

Web Marketing: Indian Scene
Quite a few studies have been conducted on ecommerce in India in recent years. They include the BCG-Nasscom Study, the CII/MRB study and the PwC study. All estimates suggest that the scope is mostly for B2B ecommerce to begin with. Firms will deal their supplier, channels and business buyers on the net. In the other words, business processes such as

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It has found it necessary to offer something unique to the surfers and make them visit the site frequently. As a starter, it offered to the surfers’ popular movies such as Godzilla and Taal as an attraction. It plans to tie up with quite a few Indian moviemakers so that it can show a number of popular and latest movies at its sites and strengthen its online promotion. Rediff also offers special discounts to the online buyers and entices them to purchases from this site. Rediff has gradually expanded the range of its offering on the web. Online booking for movies at Mumbai theatres and online hotel reservation service are parts of this scheme. Rediff has tied up with more than 200 hotels in the country for web reservations.

supply chain management and distribution management will pick up initially. Retailing to ultimate consumer on the web, which poses greater complexities and risks, may follow in due course. Service industries like insurance, banking, financial services, travel, information/communicatio n, education and entertainment may be the

pioneers here. Regarding B2C, according to Boston Consulting Group (BCG)Nasscom survey, the volume of online transactions by individual consumers is expected to touch Rs 3,000 crore in India by 2005. Another study by IDC India shows that there will be 5 million Internet users in India by 2003. This constitutes a critical mass for a thrust in web marketing.

Problem Web Marketing faces in India
In India, web marketing faces a number of problems. For convenience of discussion, we can divide them into four categories: Legal/regulatory Problems Infrastructural Problems Commercial Problems Other Problems

 Legal/regulatory Problems:
The first set of problems emanates from the absence of a legal and regulatory framework for e-commerce. E-documentation not yet legally admissible – E-commerce does away with papers and uses electronic documentation for recording transactions. While
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most developed countries have embraced e-documentation as legal tender, in India it is not yet legally admissible. Current India laws do not provide for digital signatures, digital certification, electronic payment system and online filing of statutory documentation. As of now, a physical signature is necessary for approving of an online order. The absence of sanctity about the contracts that are entered into electronically inhibits individuals/corporate like their forays into ecommerce. Web marketing also needs effective and trusted mechanism for privacy and security. This has several dimensions such as confidentiality, authentication, nonrepudiation and certification. Web marketing provides for authentication, which enables either party in a transaction to be satisfied with the identity of the other party. Non-repudiation means the parties to the transaction cannot subsequently deny their participation. The privacy and security mechanism depend upon certification by a trusted third party, such as a government body. For the consumer, security relating to credit card numbers and password protection is a big concern. These aspects have their global as well as Indian dimensions. And, a framework is also needed for dealing with cyber crimes. Absence of taxation laws – Absence of appropriate taxation law covering ecommerce is the other major problem in this category. In India, the government is yet to come up with taxation laws for e-commerce system. It has to address itself to questions such as how much tax should be charged and how it should collected. Sharing the proceeding of taxation among countries, which is the larger issue in this regard, also needs to be addressed. In short, a lot of new legal enactments and amendment in existing enactments, such as the Evidence Act and Excise and Custom Act, are required. Amendments are needed in banking regulations too. Overall, the absence of legal framework covering cyber transaction is a hurdle in the spread of web marketing.

 Infrastructural Problems:
As of date, India does not have the infrastructure needed for effective web marketing. While individual firms may accept the limitations and make a beginning, for web marketing to become a normal form of marketing in the country, the infrastructural constraints must disappear. Low density of telephone, PCs and Internet – In India, the telephone density, PC population and density of Internet access are all too low to support viable e-business. Currently, telephone density in India is just four per 100 persons. Internet density is practically minuscule. And even the few who have access, face a
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difficulty in logging onto the Internet because of the poor quality of the last mile connection. Bandwidth limitation – The bandwidth available is not enough to meet the user load. While those who use the Internet for downloading information or sending e-mail may put up with erratic lines, those who buy and sell Problems Web Marketing faces in India – products cannot afford to do so. They require a foolproof system Legal/regulatory problems: with zero downtime. The entry of o E-documentation is not yet legally admissible private ISPs into the service has no o Absence of an overall legal framework covering doubt made a difference; but it cyber transaction and payment. needs to be matched with increase in bandwidth. Setting up of o Absence of taxation laws. independent gateways by private Infrastructural problems: ISPs can, of course, solve the o Low density of telephone, PCs, and Internet bandwidth problem to some extent. access. However, given the high costs o Bandwidth limitation involved, the nascent market, the competition and the slow return, o Networking limitation many private ISPs may not be prepared to venture into some o Infrastructural bottlenecks at the delivery end gateway business. Commercial problems: Networking limitation – The other barrier related to o Low density of credit cards networks. Networking is most o Inability to pay foreign suppliers online (in essential for e-commerce. In India, foreign currency) though many companies do have Other problems network of their own, they cannot o Confidence in the system is low be shared with anyone else because of India’s telecom policy, which has all along been favoring c losed user networks. o Problem of hacking Infrastructural bottlenecks at the delivery end – Infrastructural bottlenecks at the delivery end also hamper web marketing in the country. For example, delivery of products is not easy. Indian roads and airways are unable to support 24 hour- or 48 hours-delivery schemes that are common in countries like the United States. Courier services/air express companies are also quite inadequate.
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 Commercial Problems:
Problem relating to payment – Payment problem is one of the significant elements of commercial problems. Apart from the legal dimension discussed earlier, there is a commercial dimension to the payment problem. The no.1 malady is the low density of credit cards, debit cards and smart cards in India. Added to this, in India, even those who have such cards cannot make online payment through their cards to international sellers. The regulations in vogue constrain Indians in transacting through credit cards with suppliers in foreign countries.

 Other Problems:
Confidence in the system is low – Another problem is that confidence in the system on the part of potential users is still low. The absence of legal framework already highlighted is one aspect. Corporate and household-consumers alike seem to be still skeptical about the efficacy of the process. Surveys indicate that even those who are considered as prospects for the system are not happy to buy on the net; they feel that they cannot be sure of the quality of the products bought or their timely delivery. Marketers on the web in India obviously have a long way to go; they have to create the necessary confidence among the potential customers and persuade them to see web marketing as a perfectly normal way of doing business; they have to make them comfortable with the innovation. Problem of hacking – The possibility of hackers misusing e-commerce is another issue, though it is not peculiar to India. Luckily, of late, improved software is providing the remedy to a good extent. Encryption is also being tried out to ensure safety of data in transit. Yet, the problem is not fully resolved.

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