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Current issues faced by the E-commerce brands in India

CURRENT ISSUES FACED BY THE E-COMMERCE BRANDS IN INDIA

Amuliya v.s

Santhigiri Institute of Managemnet

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Current issues faced by the E-commerce brands in India

TOPIC: CURRENT ISSUES FACED BY THE

E-COMMERCE BRANDS IN INDIA

ABSTRACT

The aim of this study is to explore the status of e-commerce in India. The research “A study of
current issues faced by the e-commerce brands in India” is to determine the current issues faced
by e-commerce companies in India and measure employed by them to overcome these issues. E-
commerce has immensely increased economic growth in domestic welfare and changes have
arisen in the market scenario too. Internet represents a new environment for extensive growth of
e-commerce, providing exchange of goods and services and also directing access of customer's
own personal accounts online. The trade negotiations on the fundamental key domestic policies,
particularly in telecommunications, financial services, and distribution and delivery have
significant important in economic growth. The varying characteristics of local environments,
both infrastructural and socio-economic also play a significant role in the variation of the
acceptance and growth of e-commerce in different regions of the world. The e-commerce
technology and the usage of online shopping have increased domestic economics tremendously
in India. This paper is an attempt to study and identify the various issues faced by e-commerce
brands in India.

INTRODUCTION

E-Commerce stands for electronic commerce and caters to exchange of products, services and
information via internet. Electronic commerce is more than just buying and selling products
online. It includes the entire online process of developing, marketing, selling, delivering, serving
and paying for products and services. It is doing business online. It includes any commercial
activity that takes place directly between a business, its partners, or its customers through
electronic communication and digital information processing technology. E-Commerce is a
modern business methodology that addresses the needs of the organizations, merchants and
consumers to cut costs while improving the quality of goods and services and increasing the
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Current issues faced by the E-commerce brands in India

speed of service delivery. India has shown tremendous growth in the E-Commerce segment. E-
Commerce has become an important tool for small and large businesses worldwide, not only to
sell to customers but also to engage them. Although the transition from traditional purchasing to
online purchasing was very slow initially in Indian market because of less number of internet
users due to lack of internet facility and awareness in public. But now the situation has changed
and the e-commerce industry is growing rapidly in our country.

Nowadays peoples of India are most likely to buy and sell products and services over the
electronic system, or in other words, we can say that now in Indian society, people are
modernized using reliable and comfortable that using of e-commerce. Uses of e-commerce
directly link to the customer with manufacturer, stakeholders, marketers, government, and
service providers. That is called Electronic commerce (e-commerce). E-commerce in India is
growing year by year, it’s very soft and reliable junction for customer choice and convenient
with the help of internet. The vendor or merchant who sells or buy products or services directly
connect with the customer and allows payment through bank debit/credit cards or direct payment
through online banking payment system.
E-commerce in contemporary eras has been growing rapidly across the global. According to
Report of Digital–Commerce, IAMAI-IMRB (2013), e-commerce industry in India has
witnessed a growth of US$ 3.8 billion in the year 2009 to US$ 9.5 billion in 2012.Internet was
introduce in India in 1995 and the first wave of e-commerce started soon thereafter. Total
number of internet users in India was 250.2 million in June 2014. The diffusion of e-commerce is
very low compare to developed countries. However, is developing at a much faster rate. The e-
commerce industry consensus is that growth is at a modulation point. Exclusive in India cash on
delivery is a preferred payment method. India has a vibrant cash economy because of which 80%
of Indian e-commerce tends to be Cash on Delivery. In this context, there is a need to make a
shift towards online payment mechanisms. By the end of 2011, the e-commerce market in India
had clocked close to Rs 50,000 cores. It is interesting to consider whether the global economic
downturn may have negatively affected the growth of e-commerce or possibly accelerated it as
consumers look to new online channels, which can often deliver greater value than traditional
stores. Today, even though there are less than 10 million internet users who are actually
engaging in e-commerce activities, about 150 million internet users in India or around 75 million
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Current issues faced by the E-commerce brands in India

households are ready for e-commerce. The growing reach in terms of internet connectivity to the
interiors of India coupled with the positive experiences of end consumers when buying online
beyond the metros and big cities are key drivers of the e-commerce boon in India. Today E-
commerce plays a vital role in Indian society & has become an integral part of our social life.
Rediffmail.com is the first E-commerce site in India. It allows different payment modes like
debit cards, credit cards of EFT ( electric fund transfer ) .It provides multiple benefits for users
like it is time-consuming, have multiple choice & low cost.

E-COMMERCE

E-commerce is a paradigm shift. It is a ``disruptive” innovation that is radically changing the

traditional way of doing business. Electronic commerce is a type of business model, or segment
of a larger business model, that enables a firm or individual to conduct business over an
electronic network, typically the internet. E-commerce is the buying and selling of goods and
services, or the transmitting of funds or data, over an electronic network, primarily the Internet.
These business transactions are business-to-business, business-to-consumer, consumer-to-
consumer or consumer-to-business. The term e-tail is used in reference to transactional processes
around online retail. E-commerce is conducted using a variety of applications, such as email, fax,
online catalogs and shopping carts, Electronic Data Interchange (EDI), File Transfer Protocol,
and Web services. It can be thought of as a more advanced form of mail-order purchasing
through a catalog. E-Commerce is the movement of business onto the World Wide Web. The
effects of e-commerce are already appearing in all areas of business, from customer service to
new product design. It facilitates new types of information based business processes for reaching
and interacting with customers like online advertising and marketing, online order taking and
online customer service. There has been a rise in the number of companies taking up e-
commerce in the recent past. Major Indian portal sites have also shifted towards ecommerce
instead of depending on advertising revenue. Many sites are now selling a diverse range of
products and services from flowers, greeting cards, and movie tickets to groceries, electronic
gadgets, and computers, etc
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Current issues faced by the E-commerce brands in India

OBJECTIVES

 Objective of the Study is to acknowledge the most crucial challenges and issues faced by
e-commerce companies in India and determine the measures employed to meet them.
 To study the present issues and status of E-Commerce in India.
 To examine the barrier of E-Commerce in India.
 To discuss the future of E-Commerce in India.

RESEARCH METHODOLOGY:

Research Methodology is the systematic and theoretical analysis of the methods applied to a field
of study. It includes the process used to collect information and data for the purpose of making
decisions. In the present paper, the secondary source of information has been used. The data has
been collected from journals, books and websites.

COMPONENTS OF E-COMMERCE
E-commerce integrates e-market, e-data inter-change and internet buying and selling of goods
and services. The E-commerce also involves using all round electronic methods and procedures
to conduct business activities to achieve the organizational goal. It uses different technologies
and hugs a wide range of financial forms such as electronic banking, electronic trading,
electronic cataloguing, Video conferencing, and multi-media communications,
electronic data interchange (EDI), electronic mail (E-mail), facsimile (fax) and all forms of
messaging between enterprises. It combines technologies (Internet, EDI, electronic forms,
electronic cash, Barcodes), information technology standards (such as EDIACT, EAN/UPC),
strategies (Just-in-time inventory management, efficient consumer response).
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Current issues faced by the E-commerce brands in India

CATEGORIES/MODELS OF E-COMMERCE:

The different categories or Models of E-Commerce are as follows:

 B2B (Business to Business):

Under B2B model one business sells to other business. Companies doing business with each
other such as manufacturers selling to distributers, wholesalers selling to retailers are the
examples of B2B e-commerce model. Pricing under this model is based on quantity of order and
is often negotiable. Chinese E-Commerce Giant Alibaba is the example of B2B model.

 B2C (Business to Consumers):

This is the usual from of E-Commerce. In this model business sells products and services directly
to consumers over the internet. They display their products or services on their Websites or Apps
and the consumers can order the product or service directly on their Websites or Apps. If an
individual is buying a pair of shoes by placing an order to Flipkart.com is an example of B2C
model.

 C2B (Consumer to Business):

Consumer to Business E-Commerce model involves consumers selling products or services to

business. In C2B consumers create value and business consume that value. For example, when a
consumer writes, reviews or when a consumer gives a useful idea for new product development
than consumer is creating value for the business if the business adopts that inputs. In C2B
consumers can offer products and services to companies and the company pays the consumers.
We can see the C2B model at work in blogs or internet forums in which the author offers a link
back to an online business thereby facilitating the purchase of a product, for which the author
might receive affiliate revenues from a successful sale.

 C2C (Consumers to Consumers):

C2C is a business model that facilitates the transaction of products or services between
customers. C2C provide an innovative way to allow customers to interact with each other. C2C
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involves the electronically facilitated transactions between consumers through some third party.
A common example is the online auction, in which a consumer posts an item for sale and other
consumer bid to purchase it, the third party generally charge a flat fee or commission. The sites
are only intermediaries, just there to match consumers.

CHALLENGES OF E-COMMERCE IN INDIA

India has less credit card population, lack of fast postal services in rural India. Accessing the
Internet is currently hindered down by slow transmission speeds, frequent disconnects, cost of
Wireless connection and wireless communication standards over which data is transmitted. High-
speed Internet connections are not available to most citizens of the nation at an affordable rate. In
India, mostly people are not aware about the English language or not so good in English
language. So that for the transaction over internet through electronic devices, language becomes
one of the major factors to purchases, hire and sell a particular product or services. Multiple
issues of trust in e-commerce technology and lack of widely accepted standards, lack of payment
gateways, privacy of personal and business data connected over the Internet not assured security
and confidentiality of data not in place to deploy ubiquitous IT Infrastructure and its maintenance
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Current issues faced by the E-commerce brands in India

Major challenges faced by E-Commerce in India:

• Poor Knowledge and Awareness: When it comes to ratio of internet consumers,

scenario is not so admirable one. Majority of Indian rural population are unaware of
internet and it uses. Surprisingly, most of internet savvies or urban populations are also
suffering from poor knowledge on online business and its functionalities. Very few are
aware of the online corruption and fraud and thus darkness still exists. A reliable survey
reveals that 50% of Indian online users are unaware of the solution of online security.

• Online Transaction: Most of Indian customers do not possess plastic money, credit card,
debit card and net banking system, which is one of the prime reasons to curtail the growth
of ecommerce. Nevertheless, in recent years, some of the nationalized banks have started
to issue debit cards to all its account holders. This is undoubtedly a positive sign for
Indian online entrepreneurs.

• Poor Internet Facilities: Internet is considered the backbone of the e-commerce. But the
penetration of internet facilities in India especially in rural area is very less. Speed of
Internet is also the major challenge in our country. No doubt we are moving towards 4G
internet services but still a lot has to be done.

• Feeling Unsecure: Feeling unsecure by customer is one of the major and continuing
challenges for e-commerce in our country. Customers have to be confident about the
integrity of the e-dealers and payment process before making any purchase order online.
Risk of hacking and cybercrimes are also there. Privacy has also become a major concern
for consumers with identity theft and impersonation. Security challenges are not
restricted to consumers only in e-commerce, corporate firms also face security challenge
as their vital information, records and reputation is at stake.

• Logistic and Supply Chain: Logistics and supply chain has been the major challenge to
the e-commerce companies. Most of the population in India lives in villages. To reach the
consumer in the village is a big challenge. The e-commerce companies’ needs to invest
more on setting up warehouse and signing up more suppliers across the country to ensure
customers get order delivered by nearest suppliers.
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Current issues faced by the E-commerce brands in India

• Cash on Delivery (COD): Cash on delivery is big problem for-commerce companies. In

the era of digital payments, cash on delivery is still the most favored mode of payment
used by the consumers. This mode is very expensive for e-commerce companies.
Sometime courier companies take 30-40 days to return the cash collected from customers
to dealers. If the customer return the product than it becomes very expensive for the
company as the company pay two way courier charges.

• High Competition: There is a cut throat competition among the player in the e-
commerce market. With intense competition, the profitability of the of the companies
decreases as they use aggressive pricing strategy and offer huge discounts and
commissions.

• Tax Structure: Tax structure is another factor for lesser growth of e-commerce sector in
India in comparison to other developed countries like USA and UK. In India there are
different types of taxes and these taxes create accounting problems to online business.
Some states are even charging separate tax on e-commerce transactions. Government has
implemented the GST Act, which is expected to solve this problem to great extent.

• Absence of Cyber Laws: Absence of cyber laws to regulate the online business
transactions is another bottleneck to e-commerce in India. The new technology has
created huge legal uncertainty in our country. The existing Consumer Protection Act
1986 needs to be amended to update and widen the scope of the Act.

• Physical Purchase: Most of Indian customers are more comfortable in buying product
physically. They want to see and touch the product before buying. So they do not prefer
to buy product online.

Future of E-Commerce in India:

The E-Commerce sector in India is growing rapidly in India. The internet users’ base in India
might still be mere 400 million which is much less as compared to developed nations of the
world, but it is expanding day by day. The accelerating growth of e-commerce in India is due to
internet penetration and easily available smart phones. Furthermore the favorable demographics
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Current issues faced by the E-commerce brands in India

and government effort of digitalization is also pushing the growth of e-commerce sector in India.
Retail sector is one of the largest growing sectors in India at present, which is expected to grow
in future with an increasing rate.

CONCLUSION:

E-Commerce has made the shopping easy. The E-Commerce Industry in India is growing rapidly
despites many challenge. E-commerce industry is one of the largest growing industries in India
at present. The sale of e-commerce industry is expected to grow by almost 4 times by 2021 than
the sales of 2015. This unprecedented growth in E-Commerce is due to increase in smart phones
and internet users, 3G/4G internet services, awareness in public, government initiative of
digitalization, advanced shipping and payment options, entry of foreign e-business players etc.
Government should take steps to provide a proper legal framework so that hurdles in the growth
of e-commerce are reduced to minimum.

Reference

 Ashok Panigrahi, Ranjan Upadhyaya, Dr. P. P. Raichurkar(January 2016 ),A study on E-

Commerce Services in India: Prospects and Problems, International Journal on Textile
Engineering and Processes ISSN 2395-3578 ,Vol 2, Issue 1 .
 Kadam Santosh N and Suryawanshi Santosh .D,CONTEMPORARY
ISSUE OF E-COMMERCE AND ITS IMPLICATIONS IN INDIAN
E C O N O M Y , Golden Research Thoughts ISSN 2231-5063Impact Factor : 3.4052
(UIF) Volume-4 | Issue-8 | Feb-2015
 Er. Harjot Kaur, Mrs.Daljit Kaur, E-Commerce in India – Challenges and Prospects,
International Journal of Engineering and Techniques - Volume 1 Issue 2, Mar - Apr 2015
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