MODERN TRENDS, CHALLENGES AND

OPPORTUNITY OF E-COMMERCE IN
INDIA – AN OVERVIEW

MR. SUBHADEEP MUKHERJEE 1

PhD-Research Scholar, Center for Management Studies
Dibrugarh University, Dibrugarh – 786004, Assam, India
Telephone: (033) 2549-4725 (R) | +91-8892722760, +91-9163342260 (M)
Email: subhadeepm21@gmail.com

&

MR. HUIDROM MICHAL2

MBA, 2nd Semester, Center for Management Studies
Dibrugarh University, Dibrugarh – 786004, Assam, India
Phone: +91-9612961828 | Email: huidrommichael22@gmail.com
 MODERN TRENDS, CHALLENGES AND OPPORTUNITY OF
E-COMMERCE IN INDIA – AN OVERVIEW
Subhadeep Mukherjee1, Huidrom Michael2
1
PhD-Research Scholar, Center for Management Studies, Dibrugarh University, Assam, India.
2
MBA, 2nd Semester, Center for Management Studies, Dibrugarh University, Assam, India

Abstract:

E-commerce stands for electronic commerce. E-commerce is performing business online and
electronically. Over last few years the popularity of e-commerce has rigorously developed due to
its quick and convenient way of exchanging goods and regional and global services. India will be
booming platform for e-commerce business models; the country already reported 65% growth in
e-commerce retail business year in 2015-2016. The paper is focused on the conceptual research
with exploratory cum descriptive nature on the basis of secondary data. This paper explains the
concept of e-commerce, business models for e-commerce, differences between traditional
commerce and electronic commerce, merits and limitations of e-commerce. It also highlights
various trends and challenges of e-commerce and also with the essential opportunity and growth
factors required for e-commerce in India.

Keywords: E-Commerce, Challenges, Opportunity, Trends, Online, Growth Factor

I. INTRODUCTION: E-Commerce is simply known as in the form of buying and

selling of product and services for the businesses and by the customer over the
internet. Online sale are rapidly increasing through which consumers are taking
advantage of low price product offered by the wholesaler or the manufacturer in the
online mode. E-Commerce is the utilization of electronic communication and digital
information processed through technology in business transaction to develop,
transform and redefine bonding for value creation between the organization and the
consumer. It also provides a common platform by which wholesalers or the retailers
sales and advertise their products and share information in on-line mode by using
information technology. This trend is said to develop the website address, consumer
 security and privacy concern. Since last few decades, the E-Commerce has rapidly
geared its popularity due to quick and convenient way of exchanging goods and
services both regionally and globally. Today E-Commerce is the backbone in Indian
society and it has become a part of our social life. The total value of E-Commerce
transactions within India has crossed beyond Rs.5.9 billion during the year 2013-14
as per the record provided by the Online Association of India. Currently, more than
40% of the world is using internet and availing the facilities of E-Commerce in the
daily life. India will be the leading ground for E-Commerce in the business model
which will exceed 72% within the year 2020 by the vision of “Digital India” launched
by our honorable Prime Minister, Shri Narendra Modi in the year 2016.

II. OBJECTIVES OF THE STUDY: The paper has following objectives:

 To explain the concept of E-Commerce.

 To study the India’s prospect in E-Commerce.
 To study the merits and limitations of E-Commerce.
 To study various challenges faced by E-Commerce in India.
 To study essential factors for growth of E-Commerce in India.

III. METHODOLOGY OF THE STUDY: The present study is conceptual with

exploratory cum descriptive in nature. It is based on the analysis of secondary data.
The secondary data is availed from various journals, magazines, research articles and
e-books.

IV. INDIA’S PROSPECTS IN E-COMMERCE: There are some essential factors

which will importantly contribute to the growth of E-Commerce industry in India.
i.e., legal requirements to generate invoice for on-line transaction, multiple payment
option, replacement, guarantee, quick service, the product quality, the dedicated 24/7
hours customer care center should be there. It also provides various types of
opportunities for retailers, wholesalers/ distributors, produces and also people.
  Service for distributor: Wholesalers may take the opportunity of E-
commerce which is capable of establishing network with reputed producers
and linking the business with online. E-commerce helps in decreasing the cost
of whole business processing.
 Service for producers: Producer can take the opportunity of E-commerce by
linking themselves online, by providing effective information and knowledge
about their product to their sub dealers and customers. By this they can reach
their product directly to the retailers and consumers. Producers get an
effective platform where they can blindly believe and trust for communicating
with their customer by sharing information without sending any leaflets.
 Service for people: Consumers can purchase with a click of mouse the
product as per their choice without moving from their home or office, They
can also avail various services like railway booking, hotel booking, e-banking,
etc. which have been a tremendous opportunities for the consumers. E-
Commerce also allows consumers to interact in electronic communities and to
exchange ideas and thoughts.
 Service for retailors: A retailor can save his visibility by linking their
business with the online distribution. They can also make, avail many more
information about various things to the consumers. They can also promote and
advertise their brands of various products by utilizing the platforms of online
web media.

V. BUSINESS MODELS FOR E-COMMERCE:

The most common models of E-Commerce are as follows.
a) Business-to-Business E-commerce (B2B): B2B refers to online
buying and selling of goods and services between two companies as
seen in e-commerce between manufacturer and wholesaler.
b) Business-to-Customer E-commerce (B2C): B2C relates to
exchanging of goods and services electronically in which customers
buy goods from company.
 c) Customer-to-Business E-commerce (C2B): C2B describes company
pays for goods offered by the customers by means of online
transaction. For example, authors providing a link back to
Amazon.com in which the authors will get return on sale of the books.
d) Customer-to-Customer E-commerce (C2C): C2C E-commerce
involves customers selling to customers using electronic media such as
online auction. Its main benefit is that there is no need of company and
as a result the cost is less as compared to above other models.

VI. DIFFERNCE BETWEEN TRADITIONAL COMMERCE AND E

COMMERCE:

S. No. Traditional Commerce E-Commerce

1. Scope is local or regional Scope is Global
2. Time required for business Time required for business
transaction is in terms of week. transaction is in terms of minutes
and seconds.
3. Product attributes are selected Product attributes are selected by
buyer.
by seller
4. Prices are listed by taking over Prices are listed by taking over
view of local market. view of global market.
5. Service is available in between 24 hours service is available for
9 a.m. to 5 p.m.in weekdays. all 7 days.
6. Marking focus is related to Marketing focus is related to
product position. customer relation.
7. Asset for traditional business is Asset to e-commerce is customer
location of shop. database.
8. Value proposition is related to Value proposition is related to
product, information and service.
product
9. Mode of payment is physically Mode of payment is electronically
transfer of money i.e. electronic transfer of money
i.e.DD,Cash,Cheque etc. using credit cards, digital cash etc.
10. Transactions are taken place Transactions are taken place
with help of paper. without help of paper.

VII. MERITS OF E-COMMERCE: The merits of E-Commerce are as follows:

 Lower Cost: Doing e-business is a cost effective process, which reduces the
logistic problems and creating an opportunity for the small business on a par
to compete with giants like Amazon.com, Flipkart.com or General Motors.
Even in commercial bank process it also proves its effectiveness by reducing
cost compared to manual transaction to online transaction where the
difference of amount are Re. 0.50 to Re.0.01 per transaction.
 Economy: E-Commerce can be considered a very much economical style of
doing business where physical storage or manual transaction is not required. It
can be only done with the support of web portal and unique innovative
product offered to the customer with maintaining the economical budget of
the product as per the societal need.
 Higher Margins: E-Commerce means maintaining higher margin in the
business. For example, the cost of transaction in processing of an air ticket
may be around Rs.5. According to the trip makers, the same ticket can be
processed in Re.1 along with the higher margin, with this the business by the
help of E-Commerce can generate more profit and it also controls and saves
times when the manual transactions are done through electronic medium.
 Better Customer Care Service: E-Commerce means providing better and
quicker service to the customer. Effective online service makes customer
happier. They provide customers with its own personal account where they
can opt the services as per their choice which helps by saving time and
money. Nowadays many companies’ product and services are on wed based
quantified where they are very much focus for providing effective services for
the customer at any time. For an example, Homeshop.18, Flipkart, Ola cabs,
Flortis medical apps and many more are very much focus on customer care
delightness.
 Quick Shopping Comparison: E-Commerce provides a common platform
where customers can compare their products before shopping. For an
example, the online shopperstops like Flipkart , Amazon etc. where customers
can compare the products before buying which increases the confident and
 trust level towards the product and it also generates delighted customer
psychology towards the product, service and company.
 Team Work: In E-commerce, electronic mailing process is one of the best
and effective example where the people can collaborate among each other by
sharing various information and solution for the problem within the work
place. It also creates a common platform where suppliers, vendors, business
partners and customers get connected with each other for sharing thoughts,
information and values for the future better result.
 Knowledge Market: E-commerce also provides an opportunities for the new
startups for showcasing their new ideas with the help of their seed money for
future entrepreneurial development within the society. For an example, the
Aditya Birla Group has many web portals focusing in various sectors of the
retail industry providing opportunities to the new starters by showcasing their
products on their portal by maintaining many minimum margin and creating a
diverged knowledge based market.

VIII. LIMITATIONS OF E-COMMERCE: The limitations of E-Commerce are as

follows:
 Web-based Security: The online security is one of the biggest problem
facing nowadays for online businesses. Customers have to feel confident
about the integrity of authenticity of e-dealers and the payment process before
they commit to purchase. This hampers consumer’s psychology due to there is
a higher risk of hacking and cyber-crimes in today’s backward.
 System and Data Intrigrity: Data protection and intrigrity of the system that
handles the data with prior concern. There are lot of new viruses which gets
discovered every day in today’s computer world. Viruses cause unnecessary
delay, storage problem, risk of data protection or file backup and many other
similar difficulties may arise. The hackers may accessing personal files and
accounts and corrupting them which makes the operation more complex.
 System Scalability: A business development is an interactive interface with
the customers through web sites. This can be determined through analysis of
 the statistical proportion of the visitors to the site are one-time or recurring
customers but when there is a huge pressure exceeds six million visits, the
website performance gets slow down and experience degradation which may
cause loss of customers. To stop this problem, website must be upgraded in
regular basis.
 E-Commerce is not free: So far the success story in E-commerce has focus
large businesses with good funding. on the other side small retailers that to go
head-to-head with the E-commerce giants are fighting losing battle among
each other. As in the brick–and–mortar environment, they simply cannot
compete on price or product offering. Brand loyalty is related to this issue,
which is supposed to be less important for online firms. Brands are expected
to lower search costs, build trust, and communicate quality. A search engine
can come up with the best music deals, for example, yet consumers continue
to flock to trusted entities such as HMV.
 Consumer Search is not Efficient or Cost Effective: On the surface, the
electronic marketplace seems to be a perfect market, where worldwide sellers
and buyers share and trade without intermediaries. However, a closer look
indicates that new types of intermediaries are essential to e–commerce. They
include electronic malls that guarantee legitimacy of transactions. All these
intermediaries add to transaction costs.
 Customer Relation Problems: Not many businesses realize that even e–
business cannot survive over the long term without loyal customers. E-
commerce does not have human face. It is an impersonal way of dealing with
the people. Moreover customers have wide choice every time they are in the
market. Hence it is uphill task to maintain the brand loyalty with the
customers. Cost of obtaining a new customer is always higher than the cost of
maintaining the existing customer. Therefore the e-business has work out the
strategies of maintaining the customer loyalty.
 High Risk of Internet Startup: Many stories unfolded in recent years about
successful executives in established firms leaving for Internet start-ups, only
to find out that their get–rich dream with a dot.com was just that - a dream.
  Proximity Of Traditional Dealers: In India vast population lives in the
metros, cities, towns and nearly 60,000 villages that are densely populated.
They do not live in deeps as in western countries where people have to travel
a lot to do the shopping in molls. Majority of the goods and services they need
are at their door steps. Hence, they don’t feel it necessary to purchase them
through internet.

IX. CHALLENGES IN E-COMMERCE: There are some obstacles responsible for

slow development of e-commerce in India. It indicates some barrier in using e-
commerce including security problems, lack of skills, cost etc. Customer resistance to
changing from a real to virtual store. People do not yet sufficiently trust paperless,
faceless transactions. For the growth of E-business in India, it needs a focus and
should to make country in the lines of E-business.

 Issues of Security: Fear of making online payment is a universal

psychological factor of Indian customers. 60% of the users do not trust the
web as payment channel. Web transaction takes place with credit card, but
credit card itself is not safe. Anyone who can transfer the data of credit card
on the web is not sure about the salesman identity. Buyer is also not sure that
card is not used for malicious purpose which also causes big challenge for e-
commerce in banking also.

 Customer Acquisition Forces: Successful e-commerce interaction between

markets should be strong. Issues related to lack of supply chain integration,
high charges for products, delay in delivery and lack of proper courier
services in some areas also make customers frustrated and one of challenge
faced by e-commerce. To get people to come on e-commerce site and make
purchase involves heavy cost due to advertisement and marketing which is
biggest problem that early stage of ecommerce startup will face.
  Product Target: More companies flood the marketplace with new products;
target marketing is becoming an increasingly important tool of differentiation.
Product which is not satisfactory for the customers tend to get replaced or
returned. Some products take long delivery time to reach customers home.
Delivery time of products may range from days to month .This is major issue
which leads into overall loss in revenue, loss of shipment costs and reputation.
The average Indian customer poses great trust issues for e-commerce
transactions.

 Less Awareness: Indian customers are more comfortable in buying products

comfortable. They tend to choose the product by touching the product
directly. Majority of Indian rural population are unaware of internet and it
uses. When it comes to ratio of internet consumers, scenario is not so
admirable one. 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 solution of online security.

 Cash on Delivery: E-commerce companies are offering COD as one of mode

of payment for the buyers. It is seen that majority of the customers denied to
make the payment at the time of delivery of the product. 30%- 50% of buyers
are also taking advantage of this while purchase of any product and service
over internet. COD has been introduced to counter the payment security issues
of online transaction but this mode has been proving expensive to companies.

X. ESSENTIAL FACTORS FOR GROWTH OF E-COMMERCE IN INDIA :

There are few online giants for shopping and travelling like flipkart.com,
Snapdeal.com, Makemytrip.com who have overcome the challenges and represents
the perfect growth trends of e-commerce in India. “E-commerce space is a booming
space as internet audiences are likely to double in next two-three years and this
industry will require talent from various sectors like technology, product, analytics,
sourcing, general management talent, merchandising and marketing”.
  Customer Convenience: Providing cash on delivery option service to the
customers. A replacement guarantee should be there which offers 30 days
replacement guarantee to their customers. The convenience of collecting
orders post work while returning should be there. Low cost shipment should
be there.
 Adoption of Multi-Channel Investments: Multi-Channel e-commerce
business is an environment in which company can sell through two or more
online channels. Cross channel investments are highly aggressive in
augmenting both online and offline buying strategies.

 Unique or Transparent: Establishing a reputation and brand for quality

products always drives demand. Booming rate of online credit card fraud,
online shoppers only want to shop with secure, reputable online retailers. You
must be upfront and transparent about your business. Giving insight into you
and your business will help build trust with shoppers and lend you an air of
authenticity.
 Location based Services: Getting the right content and targeting customers
with crisp and relevant information is of upmost importance to users on the
move. A dedicated 24/7 customer care centre should be there. Customers
these days are always as on the move, promoting the right product at the right
time and location become an integral aspect.
 Multiple Payment Option: Standard credit cards, debit cards and bank
payment options should be there. Low credit card access and low trust in
online transactions has led to cash on delivery being the preferred payment
choice also offered by e-commerce. Mindset of the consumer’s that majority
of customers does not know how to use internet they prefer traditional
approach of buying and selling.

XI. CONCLUSION: In this paper we discuss, E-commerce is an emerging trend in

Indian economy in the post economic reforms era. The revolution in the IT sector in
the recent past has been instrumental in development of e-commerce. E-commerce
provides various services to wholesalers who can take advantage of E-commerce and
capable of establishing contractors with reputed producers and linking their business
with the on-line. Also Retailers meet electronic orders and should be in touch with
consumers all the time with E-commerce. Nowadays, E-commerce is the extensive
use of computer network with internet. These benefits are cost effectiveness, quick
comparison shopping, better customer service, higher business margins resulting form
economy in business operations, information saving and knowledge market
development etc. At present there are several stumbling blocks in the development of
e-commerce such as computer initial investment, technological issues, computer ill-
literacy, legal hassles, and adverse mindset of consumers, privacy and security issues.
However, these barriers to e-commerce shall be taken care of in due course and hence
e-commerce has bright prospects in India. We need to update ourselves to greet e-
commerce and reap its benefits.
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