EXECUTIVE SUMMARY

A developing country can become industrialized and modernized if it can

extensively apply IT to enhance productivity and international competitiveness,
develop e-commerce 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 advantage of e-
commerce through opening of economies, which is essential for promoting
competition and diffusion of Internet technologies.
The Internet is boosting efficiency and enhancing market integration in
developing countries. The developed world has had a long lead over the
developing countries in the telecom infrastructure. The world average of tale -
density is 15 per cent compared to the developed world average of 55 to 60
percent. Same is true of PCs, Internet connections, and the number of Internet
hosts. All these traditional indicators for India as seen above are still small. But
the total numbers of Internet connections are large in absolute numbers. Large
enough to have critical masses of 10 to 20 million make an impact on e-commerce
and e-governance. In the next 3 to 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. The number of e-
transactions will be large enough to sustain the Internet economy.

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 INTRODUCTION

Electronic Commerce or e-commerce is business transactions

that take place by communication networks. It is a process of buying
and selling products, services, and information over computer network.
E-commerce is a set of dynamic technologies, applications and business
process that link organizations, customers, suppliers and communities
through electronic transactions and the electronic exchange of
information products and services

Electronic commerce that is conducted between businesses and

consumers, on the other hand, is referred to as business-to-consumer or
B2C. This is the type of electronic commerce conducted by companies
such as Amazon.com.

Online shopping is a form of electronic commerce where the buyer is

directly online to the seller's computer usually via the internet. There is
no intermediary service. The sale and purchase transaction is completed
electronically and interactively in real-time such as Amazon.com for
new books. If an intermediary is present, then the sale and purchase
transaction is called electronic commerce such as eBay.com.

The past two years have seen a rise in the number of companies' embracing
e-commerce technologies and the Internet in India. Most e-commerce sites have
been targeted towards NRI's with gift delivery services, books, audio and
videocassettes etc. Major Indian portal sites have also shifted towards e-commerce
instead of depending on advertising revenue. The web communities built around
these portal sites with content have been effectively targeted to sell everything
from event and movie tickets to groceries and computers. E-commerce sites have
popped up everywhere hawking things like groceries, bakery items, gifts, books,
audio & videocassettes, computer etc.

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 HISTORY OF E-COMMERCE
Originally, electronic commerce meant the facilitation of commercial transactions
electronically, using technology such as Electronic Data Interchange (EDI) and
Electronic Funds Transfer (EFT). These were both introduced in the late 1970s,
allowing businesses to send commercial documents like purchase orders or
invoices electronically.

Online shopping, a form of electronic commerce, In 1979 Michael Aldrich, an

English inventor, connected a modified 26" color domestic television to a real-
time transaction processing computer via a domestic telephone line and invented
online shopping. The first recorded B2B was Thomson Holidays 1981 the first
recorded B2C was Gateshead SIS/Tesco in 1984. The world's first recorded online
home shopper was Mrs. Jane Snowball, 72, of Gateshead, England in May 1984.

An early example of many-to-many electronic commerce in physical goods was

the Boston Computer Exchange, a marketplace for used computers launched in
1982. An early online information marketplace, including online consulting, was
the American Information Exchange.

The Internet became popular worldwide around 1994 when the first internet
online shopping started; it took about five years to introduce security protocols
and DSL allowing continual connection to the Internet. By the end of 2000, many
European and American business companies offered their services through the
World Wide Web. Since then people began to associate a word "ecommerce" with
the ability of purchasing various goods through the Internet using secure protocols
and electronic payment services.

Historical Timeline
1979: Michael Aldrich invented online shopping
1981: Thomson Holidays, UK is first B2B online shopping
1985: Nissan UK sells cars and finance with credit checking to customers online
from dealers' lots.
1992:Pizza Hut offers online ordering on its Web page
1995: Jeff Bezos launches Amazon.com
2010: US e-Commerce and Online Retail sales projected to reach $173 billion, an
increase of 7 percent over 2009

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 EVOLUTION OF E-COMMERCE

For as long as retail has existed, it‘s been evolving to fit the needs of consumers.

From marketplaces in ancient Greek acropolis to the sprawling, modern

shopping malls of today, consumers‘ needs have always been what‘s driven
innovation in retail. And in no period of history is that more true than in the last
generation.

In just the last 50 years, we‘ve seen retail makes leaps and bounds into
the digital age. Ecommerce was just a pipe dream a generation ago, and now it‘s
one of the most popular ways people shop. From its humble beginnings in the
1970s, to when people first began creating ecommerce websites in the 1990s, to
its explosion of new technology and popularity in the 2010s, here‘s how
ecommerce has evolved over its lifespan to become the ubiquitous part of
shopping it is today.

E-commerce Today: A Trillion Dollar Industry

In 2020, global ecommerce sales are projected to top $4.13 trillion, an 18 percent
increase from 2019. More than 2 billion people now regularly make ecommerce
purchases worldwide, and mobile ecommerce has continued to grow — nearly 73
percent of ecommerce sales are expected to take place on mobile devices by 2021.

Globally, around one-third of people now make an online purchase at least once
per week. China remains the top ecommerce market in the world, followed by the
U.S., the U.K., and Japan.

What‘s next for ecommerce? Based on the trends we‘ve seen as ecommerce has
grown, we can only expect more growth in the future. It‘s clear that in the internet
age, ecommerce is here to stay.

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Since, Internet has the ability to reach the customer‘s home; the Distribution
Channel has started to assume new meaning to the B2C and C2C e-Marketer. The
Physical delivery got converted to electronic delivery; physical products were now
electronic products, displayed on a website. With options of paying online through
debit and credit cards, even the Transaction was purely electronic.

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 OBJECTIVES OF E-COMMERCE
The main objectives of the e-shopping are given below:

1. To provide information about various products in different category.

2. Customer can purchase Products Online.
3. Customer can login and get various information about products and can
purchase the suitable product with price and quality comparison.
4. Customer can pay online, so security is must therefore e-shopping provide
secure transactions.
5. After sale e-shopping also provide after sales service in which customer
problem is solved.

Data security is maintained to relatively high level by implementing it at Database

level, so as to ensure that only authorized users have access to confidential client
information

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 CATEGORY OF E-COMMERCE

E-banks
E-trade
E-consulting
E-engineer
E-learning
E-mail
E-marketing
E-transactions

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GLOBAL TRENDS IN E-COMMERCE

 Government programs are a significant vehicle for c-commerce

implementations
 Retail, grocery and logistics industries are the most active in encouraging
trading partners to implement EDI
 Small and medium sized companies demand flexible integration solutions
 European companies focus on core competencies and outsource technology
to consulting groups
 High percentage of first time implementers seek to achieve full integration
 Organizations are seeking a scalable, reliable system that is easy to deploy
and manage
 Software needs to be capable of handing different business processes and
must integrate with existing IT investments

As social media, app stores and global availability become standard, many
companies are looking to enhance the online customer experience. And while
retail and other transactions via Internet are customary, more than ever companies
are simplifying the ways in which customers interact with their website and
ultimately make online purchases. Here are eight trends happening right now in
global e-commerce that seek to enhance the user experience:

 Micro-payments – Among the most revolutionary changes in the coming

months—not years—is the use of micro-payment systems from a variety of
financial firms, e.g., Paypal, Visa, WesternUnion, among others, including
banks. This trend is facilitated by the W3C working group that approved
these protocols and technical standards for the interworking. These systems
will change not only how we carry money but how we value money and
think about purchases. (Consider how a purchase of $4.99 feels in a mobile

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 app store vs. at Dunkin' Donuts.) Payment systems that make it easier to
buy online, coupled with mobile technologies will accelerate the usage of
global e-commerce applications.
 Mobile technologies – More people access the Internet on their mobile
devices than on any other device. We are rapidly approaching the time (if
we are not already there) where designs must be created for the mobile Web
first, and for the desktop second. Mobile technologies facilitate comparison
shopping; with the advent of barcode reader apps and price-comparison
databases, a consumer could snap a bar code in Walmart and quickly
reference product reviews and prices on walmart.com (or compare prices
with Walmart competitors). Mobile technologies also facilitate impulse
buys – especially with the advent of micro-payments tied to the mobile
device. Just recently, Starbucks customers can not only place an order with
their Smartphone, but also make a purchase.
 Social media – As Facebook has become the most visited site on the Web,
the role of social media, including Facebook and its local clones such as
Twitter, is increasingly important. Social media sites increasingly act as
points of entry to e-commerce sites, and vice versa, as e-commerce sites
build rating, loyalty and referral systems tied to social media. Group buying
(e.g., Groupon) is also gaining mainstream ground, with many "deal of the
day" sites competing for an increasingly savvy consumer base, but
improvements lie ahead as the social aspects and user experience are
refined.
 Fulfillment options – I believe that users will want to have multiple
fulfillments and return options when interacting with a vendor: ship to
address, courier, pick-up in store, return to store, etc. Having many
fulfillment options is how customers view their overall customer
experience. Some companies have made a business proposition online by
being exceptional in service to the online channel (e.g., Zappos).

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 Global availability – Increasingly, consumers want the availability to buy
products from foreign sites and have them delivered locally. Thus, currency
and customs will be of growing concern to many online retailers. Along
with this, there will be concerns with local privacy laws and restrictions on
related data collection and storage.
 Localization – While the trend is to globalize, what‘s often more important
is to localize. User Centric‘s research clearly shows that sites that ‗feel‘
local – with proper imagery, language, time/date, weights/measures,
currency, etc. – resonate far more than sites that seem culturally distant or
sterile.
 Customizability – Consumers want control, and want to be able to design
the details of the items they purchase.
 Time-based availability – Some of the hottest and most successful sites are
those that have a time-critical response component. Sites like Groupon,
Gilt and others capitalize on the perception of limited-time
availability. Creating a sense of urgency drives traffic and purchase
behavior.

Amongst emerging economies, China's eCommerce presence continues to

expand. With 384 million internet users, China's online shopping sales rose
to $36.6 billion in 2009 and one of the reasons behind the huge growth has
been the improved trust level for shoppers. The Chinese retailers have been
able to help consumers feel more comfortable shopping online. eCommerce
is also expanding across the Middle East. Having recorded the world‘s
fastest growth in internet usage between 2000 and 2009, the region is now
home to more than 60 million internet users. Retail, travel and gaming are
the region‘s top eCommerce segments, in spite of difficulties such as the
lack of region-wide legal frameworks and logistical problems in cross-
border transportation. E-Commerce has become an important tool for
businesses worldwide not only to sell to customers but also to engage them.

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THE STATUS OF E-COMMERCE IN INDIA AND ITS POTENTIAL

Ecommerce 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 web site, which sells products or services directly from the site
using a shopping cart or shopping basket system and allows credit card payments.
Back in 2005, the 100 million mark would have seemed impossible. With a small
number of 25 million internet users in India (2.5% penetration) in 2005, we have
seen a surge in the following years as the number jumped to 46 million in 2007
and 100 million in 2010 which is more than a 100% growth.

The following table shows the YoY growth:

Year Internet Users

(millions)
2006 32.2

2007 46.0

2008 51.8

2009 61.3

2010 100.0

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 E-COMMERCE IN INDIA TODAY
Today E-commerce is a byword in Indian society and it has become an integral
part of our daily life. There are websites providing any number of goods and
services. Then there are those, which provide a specific product along with its
allied services.

Multi-Product E-Commerce

Some Internet portals provide almost all categories of goods and services in a
single site hence; they are targeting buyers of every possible product and service.
The most popular examples are www.indiaplaza.com, www.india.com,
www.khoj.com, www.sify.com, www.rediff.com, www.indiatimes.com and so on.
These Indian E-commerce portals provide goods and services in a variety of
categories.

To name a few:
• Apparel and Accessories for men and women
• Health and beauty products
• Books and magazines
• Computers and peripherals
• Vehicles
• Collectibles
• Software
• Consumer electronics
• Household appliances
• Jewelry
• Audio/Video entertainment goods
• Gift articles
• Real estate and services
• Business opportunities
• Employment
• Travel tickets
• Matrimony
• Pets and more

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Single-Product E-Commerce

Some Indian portals/websites deal in a specialized field, for example:

Automobiles:
Examples are: http://www.indiacar.com/ and http://www.automartindia.com/.
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:
• Car research and reviews
• Online evaluation
• Technical specifications
• Vehicle Insurance
• Vehicle Finance
• Dealer Locator
• Regional Transport Office regulations
• Expert speak
• Message board…and more.

Stocks and shares and e-commerce

In India today, we can even deal in stocks and shares through e-commerce. Some
of the sites are: http://www.equitymaster.com; http://www.5paisa.com.Some of
the services offered to registered members are:
• Online buying/dealing of stocks and shares;
• Market analysis and research
• Company information
• Comparison of companies
• Research on Equity and Mutual Funds
• Tracking Market Trends
• Hotline for advice on Risk Management
• 24-Hour helpdesk….and more.

Real estate and E-commerce:

Portals like http://www.indiaproperties.com/ facilitate online dealing in real estate.
They offer either outright purchase or lease of a property through their portal.
They provide information on new properties as well as properties for resale .One
can deal directly with developers or builders or through consultants and brokers
.Allied services:
• Housing Finance
• Insurance companies

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• Architects & Interior Designers
• NRI services
• Property Management Consultants
• Packers & Movers
• Security & Maintenance Services
• Vaastu or Feng Shui Consultants…and more.

Travel & Tourism and E-commerce:

India has a rich history with cultural 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 faced culture and beauty. A major Government of India portal,
http://www.tourisminindia.com/ has a vast variety of information for a potential
tourist.
The tourist destination sites are categorized according to themes like:
• Adventure - trekking, mountain climbing etc
• Eco-Themes pertains to jungles, flora and fauna
• Beaches of India
• Architectural attractions
• Forts and Palaces
• Buddhist attractions
• Hill resorts
• Desert treks
• Pilgrimage sites

Allied services offered are:

1. Passport & visa
2. Travel & accommodation information
3. Weather information
4. Festival & fair dates
5. Shopping
6. Tour Operators
7. Information on Cuisine & Restaurants

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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. Today there are
specific Indian websites making the act of gifting quick and easy to suit ones
lifestyle. One such site is
http://www.indiangiftsportal.com/.
The gifts are categorized as:
1. Collectibles like paintings and sculptures
2. Luxury items like leather goods, perfumes, jewelry boxes, etc
3. Household curios and carpets, etc
4. Toys & games
5. Chocolates
6. Flowers
7. Wood-craft & metal-craft
8. Idols for worship…and more.

Also the items can be searched by different regions of India, as every region has a
special style in making handicrafts.

Hobbies and E-Commerce:

The most popular hobbies from time immemorial are reading, music and films. On
the Indian website http://www.firstandsecond.com/ one can buy more than
300,000 titles of books, cassettes, VCDs and DVDs.
The books cover a wide range of topics like Business, Art, Cookery, Engineering,
Children‘s Stories, Health, Medicine, Biographies, Horror, Home & Garden, etc.
As for music and videos, they are available in English as well as in Indian
languages to cater to the varied tastes and the topics range from devotional songs,
old-time favorites and retro and jazz to the latest pop, rap, etc.

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 like http://www.jeevansathi.com/ (meaning life-
partner.com in Hindi)and http://www.shaadi.com/ (meaning marriage.com in
Hindi).One can search for a suitable match on their websites by region of
residence (India or abroad), religion or caste. Once registered with them, they
have email facility and chat rooms too, so that the couple gets to know more about
each other before making the biggest decision of their lives.
Allied services for registered members:

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1. Astrological services
2. Information on Customs and Rituals
3. Legal issues
4. Health & Beauty
5. Fashion & Style
6. Wedding Planners
7. Honeymoon Destinations…and more.

Employment and e-commerce:

Two major portals like www.monsterindia.com and www.naukri.com (meaning

job.com in Hindi) are instrumental in providing job seekers with suitable
employment at the click of ammo use. They have directories categorized under the
headings Employers and Job Seekers. The service for job seekers is free and 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. The
opportunities offered are unlimited.

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 LITERATURE REVIEW

Electronic commerce or e-commerce consists primarily of the

distributing, buying, selling, marketing, and servicing of products or services over
electronic systems such as the Internet and other computer networks. The
information technology industry might see it as an electronic business application
aimed at commercial transactions. It can involve

Electronic funds transfer, supply chain management, e-marketing,

online marketing, online transaction processing, electronic data interchange (EDI),
automated inventory management systems, and automated data collection
systems. It typically uses electronic communications technology such as the
Internet, extranets, e-mail, e-books, databases, and mobile phones.

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FUNCTIONS OF ELECTRONIC COMMERCE
The four functions of e-commerce are:
 Communication
 Process management
 Service management
 Transaction capabilities

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 SIGNIFICANCE OF E-COMMERCE
The electronic market place participants are not limited only to digital
product companies‘ e.g. publishing, software and information industries. The
digital age and the digital revolution affect all by virtue of their process
innovations.

Web-TV and digital television are going to affect TV news and entertainment
programs. Changes in telecommunication will affect the way the information is
received, product announcements, orders etc. Phones, Fax machines, Copiers, PCs
and Printers have become essential ingredients in doing business, so are E-mail,
websites and integrated digital communication Today‘s office business machines
are not integrated (e.g. Faxed orders have to be typed in on computers), the much
talked about convergence will drive all these equipment into one digital platform,
whether it be a computer connected to the Internet and intranet, a new kind of
device capable of interacting with other devices, because that device will prove to
be more efficient and productive.

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E-commerce gives customers the freedom to purchase items from anywhere.

According to a February 2001 Business 2.0 report, 55 percent of users enjoy

online shopping because there are no salespeople involved. In a December 2000
study, it is also indicated that "anyone with access to a credit card would buy over
the Net." Based on such phenomena, it is safe to say that interactivity, which is
more secure than ever and saves the need of a middleman during an online
transaction, has played a major role in boosting the growth of e-commerce.

Compared to traditional retailing, users also cited the following reasons as to why
they prefer online shopping:

Convenience 84%

Saves time 72%

Avoids crowds 64%

Allows more time to research 61%

Lower prices 60%

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 KEY DRIVERS OF E-COMMERCE

It is important to identify the key drivers of e-commerce to allow a

comparison between different countries. It is often claimed that e-commerce is
more advanced in the USA than in Europe. These key drivers can be measured by
a number of criteria that can highlight the stages of advancement of e-commerce
in each of the respective countries. The criteria that can determine the level of
advancement of e-commerce.

1. TECHNOLOGICAL FACTORS – The degree of advancement of the

telecommunications infrastructure which provides access to the new technology
for business and consumers.

2 .POLITICAL FACTORS – including the role of government in

creatinggovernment legislation, initiatives and funding to support the use
and development of e-commerce and information technology.

3 .SOCIAL FACTORS – incorporating the level and advancement in IT

educationand training which will enable both potential buyers and the workforce
to understand and use the new technology.

4 ECONOMIC FACTORS – including the general wealth and commercial health

of the nation and the elements that contribute to it. Since a distinction has been
made in this book between e-commerce and e-business for consistency, the key
drivers of e-business are also identified. These are mainly at the level of the firm
and are influenced by the macro environment and e-commerce.

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 E-COMMERCE INITIATIVES
There is a clear need of government action and international
agreements on E-commerce issues. It is generally recognized that there is a need
for simple, transparent and predictable legal environment for E-commerce on a
national and international level and that Governments should avoid undue
restrictions on E-commerce in order to avoid competitive distortion. To develop
such global framework for E-commerce, a large number of international and
regional bodies have been working notably amongst them being OECD, WTO,
WIPO, NCITRAL and ITU.

A comprehensive document reporting on international and regional

Bodies and their activities and initiatives in E-commerce was prepared (Jan.1999)
by OECD Secretariat for OECD Ministerial Conference, which was held in
Ottawa in1998. "A Borderless World: Releasing the Potential of Global Electronic
Commerce"(OECD, 1999) indicated the potential for global business for many
countries. Second half of 1999 saw commitments of some of the big companies to
move their multi-billion dollar purchasing operations on to the Internet. With
many Fortune 500 Companies moving their supply-chain transactions involving
purchase and sales of goods and services on to the Internet has created a real
necessity among those who do not have E-commerce presence to move in quickly
or be left behind. Now major multinationals such as Intel, IBM, Cisco,3 Com,
Dell and many others have had E-commerce models for 3-5 years. E-commerce
between business and consumers (B2C) which means direct purchase of products
on the Internet, for example, books, automobiles, music, entertainment, software,
PCs and many other products has also picked-up significantly.

E-commerce is one area where market forecasts made in 1996-97

turned out to be much less than actual performance. Projections have been revised
subsequently by most of the consultancy firms Forrester (IEEE, 1999) forecasts
that worldwide Internet Commerce will reach between $ 1.4 and $ 3.2 trillion
in2003, up from a range of $ 55 billion to $ 80 billion in 1998. This growth will
happens as the world‘s largest economies of India and China would completely
come online by 2004

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 OPPORTUNITIES FOR INDIA
At macro level, if one looks at the opportunities for India, outsourcing
software and IT services from USA and other advanced countries have emerged as
one of the means to reduce the cost of E-commerce today. In this regard, India has
emerged as a preferred destination. Therefore, Indian Software Export Industry
could target for a significant share of global e-Business/E-commerce market in the
years to come. In the emerging global digital economy. E-commerce would give
opportunity to small and medium Indian enterprises to project their capability
globally and thus participate more proactively in such ventures.

Many traditional sectors such as handicrafts, textiles, art, and herbal

medicines which have failed in the past to tap the global markets due to lack of
marketing resources, should find an ideal medium in internet. Indian cultural
heritage, monuments, temples, and classical music could be made known widely
to the world at a very low cost of marketing and could be further leveraged in
enhancing global tourism of which India gets only 2 percent. E-Commerce is one
IT tool that could do wonders to the Indian economy in many fields. In
NASSCOM study, India has the potential to create E-business worth $1.5 billion
by 2004and around $10 billion by 2008.

E-commerce is a fast moving area internationally in terms of opportunities and the

technologies. It is predominantly led by industry and user sector with government
playing a catalytic role. Government by providing proactive policies and
environment and facilitating support and critical inputs for growth can do wonders
for E-commerce in and beyond India. In the last one year, significant progress has
been made in the country in this regard. New Telecom Policy 1999, new ISP
policy and certain specific policies have emerged out of acceptance of Part I of the
Report of National Task Force on IT and Software Development. They need to be
implemented aggressively and without delay.

The drive to set-up world class information infrastructure at most

competitive price has to be accelerated. It is expected that information for E-
commerce and B-commerce will be passed seamlessly. The requirement to
develop adequate bandwidth of the order of 10Gb on national routes and even
terabits on certain congested important national routes will be immediately
addressed to so that growth of IT as well as E-Commerce will not be hampered.

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 SECURITY FOR E-COMMERCE
There is a tremendous rise in economic transactions using this medium. However,
since Internet is evolving as a means to provide easy interconnectivity of networks
for information exchanges freely as possible, the systems are not designed keeping
the requirements of information security. Aspects like privacy, integrity,
authenticity and non-repudiation which are essential elements for a commercial
transaction are not taken care of in its elemental form.

There are frequent reports of hacking and other kinds of abuse of the network
owing to such deficiencies. To make this medium suitable for E-commerce,
significant work on a continuous basis needs to be taken up and government is
expected to take keen interest in this area of work Encryption being the key
element to ensure security in a network communication, the government could
consider extending the present restriction of 40 bit encryption level. This will
necessitate an up gradation of facilities with the national security agencies.
Specific network security products like Intruder Detection System and Firewall
are being developed in the country. Though, many such products are available
internationally, national capability in this area is required to ensure that no trap-
doors are available giving rise to the lack of confidence on the part of business
houses.

There would be, in addition, indigenous products similar to Secure Electronic

Transaction (SET) and Secure Socket Layer (SSL). Besides expertise and
capability building, efforts are needed to promote E-commerce as a wealth
building enterprise which would increase GNP. The government is ensuring
setting up of Public Key Infrastructure and Certification Authority (CA) by the
end of the year 2001following the passage of IT Bill so that interested E-
commerce players can have secure transactions as required.

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 E-COMMERCE & TAXATION

The growth of e-commerce has resulted in exciting opportunities becoming

available for people to adopt this medium as an avenue to market products and
services globally. The potential uses of e-commerce have created implication for
governments and the sovereign of their tax systems. Some of the organizations
that have taken note of this development and constituted study groups and
guidelines to tackle transactions undertaken include:
* The US treasury has released a guideline on Selected Tax Policy Implications of
Global Electronic Commerce.
* The OECD has produced a report on Electronic Commerce Opportunities and
Challenges For Government.

* The European Commission has also released a report constituted by a high-level

group of experts on e-commerce.

There is an unprecedented level of international co-operation over such a short

span of time on the challenges posed by e-commerce and this, in fact, has brought
in seriousness within governments and tax authorities to tackle the tax
implications of e-commerce transactions. National governments have a
disadvantage of not being able to dictate domestic policies in relation to e-
commerce. Some of the tax issues that could arise because of e-commerce would
be as follows:

Personal Tax: Individuals could escape the tax net by not declaring the income
generated by providing services via the Internet.

Residence: People using the Internet can effectively live and work in a number of
jurisdictions. A similar situation is possible in the case of corporate.

E-Commerce: Companies can transfer profits from high tax jurisdictions to low
tax jurisdictions, or adjust their income and expenses with branches or subsidiaries
in the low tax jurisdictions via Internet transactions.

Tax on Goods & Services: By routing transactions through the Internet, it would
be difficult to subject goods and services to tax. The jurisdiction where the sale or
service has happened could become a matter of interpretation.

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 USAGE OF E-COMMERCE

According to the survey conducted among the Industry players, the E-Commerce
Industry in India was worth INR 7080 crores at the end of 2006-07. Is it big
enough? How much is it expected to grow?
 Indian e-commerce market hosted US$3 billion of transactions in
2011 (Source: IAMAI)

 It is forecast that more than US$20 billion worth of transactions will be

carried out online over next five to seven years in India and 12-15% of the
country‘s shopping activities will move online. (Source: IAMAI)

 A total of 9 million Indian internet users carried out online transactions in

2011. This number is predicted to reach 38 million by 2015. (Source:
Avendus)
 India‘s B2C market is expected to grow at a CAGR of 34.2% between now
and 2015(Source: E marketer)

 Online retail sales will reach US$2.4 billion (excluding online travel) in
2012, with the number of online buyers in the country expanding to 21.5
million (Source: E marketer)
 In November 2011, approximately 60% on Indian online users visited retail
sites, with 7.6 million and 7.1 million users visiting coupon and consumer
electronics sites respectively(Source: Comscore)

The adoption and usage of E-Commerce in the country is a function of the overall
environment for Internet usage in a country. To correctly understand the likely
growth path for E-Commerce in India it is imperative to understand the internet
ecosystem in the country. Some of the key variables that need to be understood
are the proportion of computer literates, internet penetration, frequency of access
to the internet, purpose of internet access etc. A correct mapping of these would
help in understanding the overall framework of E-Commerce in the country.

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TRIGGERS AND BARRIERS FOR THE E-COMMERCE MARKET

In addition to the industry size, it is imperative to understand the reasons behind

the growth and reasons hampering the growth E-Commerce industry in the
country. This section elaborates the triggers and barriers that impact the adoption
of E-Commerce by the Internet users we would start by enlisting the triggers
which motivate the online shoppers to buy Products online.

The major reason that drives Internet users to shop online. It is followed by
convenience of anyplace, anytime shopping online. Online stores do not have
space constraints, thus, a wide variety of products can be put for display.
Companies can display whole range of products being offered by them. This
further enables the buyers to choose from a variety of models after comparing the
looks, features, prices of the products on display.

To attract customers to shop online, e Marketers are offering great deals and
discounts to the customers. This is facilitated by elimination of maintenance, real-
estate cost of the seller, selling its products online. An insight into some of the
problems stated by customers while buying through Internet will help us to have a
closer look at the issues which need to be addressed by the online community.

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Barriers in buying through Internet

Absence of touch-feel-try creates concerns over the quality of the product

on offer. Another roadblock in the way of E-Commerce is lack of interactivity so
as to allow for negotiations between the buyer and sellers. In addition to above,
the security of online payments is a major issue requiring immediate attention of
the e Marketers. Increasing rate of cyber crimes has made customer apprehensive
of revealing their credit card details and bank details online.

Moreover, the duration of selecting, buying and paying for an online

product may not take more than 15 minutes; however, delivery of the product to
customer‘s doorstep may take about 1-3 weeks. Further more our past observation
has been that in India shopping is an experience itself. Consumers look forward to
it as an opportunity to get out of their homes and interact with other people. The
recent growth in the malls and the hypermarkets only corroborate this fact. Thus,
Ecommerce has to bank on the convenience and discount platform as there is no
way that they can compete with the offline platforms on the experience that they
provide.

There is no doubt that Internet shopping has a number of benefits to offer. With
changing lifestyles, E-Commerce is surely the most appealing and convenient
means of shopping. However, the grave issues surrounding the market do not
make it the ―choice‖ of most of the Internet users. Addressing the above specified
issues, thus, has become critical to expand beyond the current user base.

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 IMPACTS OF E-COMMERCE
Impact on markets and retailers
E-commerce markets are growing at noticeable rates. The online market is
expected to grow by 56% in 2015–2020. In 2017, retail e-commerce sales
worldwide amounted to 2.3 trillion US dollars and e-retail revenues are projected
to grow to 4.891 trillion US dollars in 2021. Traditional markets are only expected
2% growth during the same time. Brick and mortar retailers are struggling because
of online retailer's ability to offer lower prices and higher efficiency. Many larger
retailers are able to maintain a presence offline and online by linking physical and
online offerings

E-commerce allows customers to overcome geographical barriers and allows them

to purchase products anytime and from anywhere. Online and traditional markets
have different strategies for conducting business. Traditional retailers offer fewer
assortment of products because of shelf space where, online retailers often hold no
inventory but send customer orders directly to the manufacture. The pricing
strategies are also different for traditional and online retailers. Traditional retailers
base their prices on store traffic and the cost to keep inventory. Online retailers
base prices on the speed of delivery.

There are two ways for marketers to conduct business through e-commerce: fully
online or online along with a brick and mortar store. Online marketers can offer
lower prices, greater product selection, and high efficiency rates. Many customers
prefer online markets if the products can be delivered quickly at relatively low
price. However, online retailers cannot offer the physical experience that
traditional retailers can. It can be difficult to judge the quality of a product without
the physical experience, which may cause customers to experience product or
seller uncertainty.

Security is a primary problem for e-commerce in developed and developing

countries. E-commerce security is protecting business' websites and customers
from unauthorized access, use, alteration, or destruction. The type of threats
include: malicious codes, unwanted programs (ad
ware, spyware), phishing, hacking, and cyber vandalism. E-commerce websites
use different tools to avert security threats.

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Impact on supply chain management
For a long time, companies had been troubled by the gap between the benefits
which supply chain technology has and the solutions to deliver those benefits.
However, the emergence of e-commerce has provided a more practical and
effective way of delivering the benefits of the new supply chain technologies.

E-commerce has the capability to integrate all inter-company and intra-company

functions, meaning that the three flows (physical flow, financial flow and
information flow) of the supply chain could be also affected by e-commerce. The
affections on physical flows improved the way of product and inventory
movement level for companies. For the information flows, e-commerce optimised
the capacity of information processing than companies used to have, and for the
financial flows, e-commerce allows companies to have more efficient payment
and settlement solutions.

In addition, e-commerce has a more sophisticated level of impact on supply

chains: Firstly, the performance gap will be eliminated since companies can
identify gaps between different levels of supply chains by electronic means of
solutions; Secondly, as a result of e-commerce emergence, new capabilities such
implementing ERP systems, or Megaventory, have helped companies to manage
operations with customers and suppliers. Yet these new capabilities are still not
fully exploited. Thirdly, technology companies would keep investing on new e-
commerce software solutions as they are expecting investment return. Fourthly, e-
commerce would help to solve many aspects of issues that companies may feel
difficult to cope with, such as political barriers or cross-country changes. Finally,
e-commerce provides companies a more efficient and effective way to collaborate
with each other within the supply chain.

Impact on employment
E-commerce helps create new job opportunities due to information related
services, software app and digital products. It also causes job losses. The areas
with the greatest predicted job-loss are retail, postal, and travel agencies. The
development of e-commerce will create jobs that require highly skilled workers to
manage large amounts of information, customer demands, and production
processes. In contrast, people with poor technical skills cannot enjoy the wages
welfare.

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 E-commerce brings convenience for customers as they do not have to
leave home and only need to browse website online, especially for buying the
products which are not sold in nearby shops. It could help customers buy wider
range of products and save customers‘ time. Consumers also gain power through
online shopping. They are able to research products and compare prices among
retailers. Also, online shopping often provides sales promotion or discounts code,
thus it is more price effective for customers..
E-commerce technologies cut transaction costs by allowing both
manufactures and consumers to skip through the intermediaries. This is achieved
through by extending the search area best price deals and by group purchase. The
success of e-commerce in urban and regional levels depend on how the local firms
and consumers have adopted to e-commerce
However, e-commerce lacks human interaction for customers, especially
who prefer face-to-face connection. Customers are also concerned with the
security of online transactions and tend to remain loyal to well-known retailers. In
recent years, clothing retailers such as Tommy Hilfiger have started adding
Virtual Fit platforms to their e-commerce sites to reduce the risk of customers
buying the wrong sized clothes, although these vary greatly in their fit for
purpose. When the customer regret the purchase of a product, it involves returning
goods and refunding process. This process is inconvenient as customers need to
pack and post the goods. If the products are expensive, large or fragile, it refers to
safety issues
Impact on the environment
In 2018, E-commerce generated 1.3 million tons of container cardboard in North
America, an increase from 1.1 million in 2017. Only 35 percent of North
American cardboard manufacturing capacity is from recycled content. The
recycling rate in Europe is 80 percent and Asia is 93 percent. Amazon, the largest
user of boxes, has a strategy to cut back on packing material and has reduced
packaging material used by 19 percent by weight since 2016. Amazon is requiring
retailers to manufacture their product packaging in a way that doesn't require
additional shipping packaging. Amazon also has an 85-person team researching
ways to reduce and improve their packaging and shipping materials.
Impact on traditional retail
E-commerce has been cited as a major force for the failure of major U.S. retailers
in a trend frequently referred to as a "retail apocalypse. The rise of e-commerce
outlets like Amazon has made it harder for traditional retailers to attract customers
to their stores and forced companies to change their sales strategies. Many
companies have turned to sales promotions and increased digital efforts to lure
shoppers while shutting down brick-and-mortar locations.The trend has forced
some traditional retailers to shutter its brick and mortar operations

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KEY REASONS FOR THE SUCCESS OF E-COMMERCE
 Shopping 24x7: E-commerce facilitates shopping anytime, anywhere and
for almost anything desired. Busy consumers prefer this to the restrictions
of when a mall/shop is open and the need to physically travel to a shop.
Online business takes shopping a step further by taking itself to the
customer creating conveniences of shopping anywhere and at anytime.

 Reduced operational cost: Since the entire business can be moved online,
the need for physical stores has become obsolete. Less infrastructural
investment and associated labour costs drives up the profit margin. The
seller can then transfer this benefit to the customer in the form of
discounted pricing which boosts the appeal of online shopping.

 Easy to compare: It is far easier and quicker to compare prices of goods

online, equipping the customer with the information to decide the right
price or terms for themselves. The comparison is not restricted to items
from a single seller, or a single region. One can explore products across
global markets via e commerce.

 Safe & secure:Customers can trust the process of going online and
purchasing only when transactions are fast, convenient and secure. A high
degree of integrity is possible only when the online electronic payment
provider is reputable and trustworthy. In India, all payment transaction
providers are required to comply with the security requirements laid out by
the Reserve Bank of India making the system more robust and reliable.

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 Increased reach for the merchant: Just as the customer finds them able to
venture across geographic markets, the merchant too is able to display his
product to customers in new territories. Market penetration also becomes
far more achievable with e-commerce; it is possible for a merchant in
Mumbai to extend his reach to north-eastern cities or even rural villages
that are now connected by the online network.

 Social media trend: In India, with the increasing propensity of social

media, businesses have now begun to engage their customers on social
networking portals such as Facebook. Promotions, sales and new products
are increasingly showcased through such channels and mobile apps are now
available that suggest products to users based on their profiles. These are
likely to be rapidly developing marketing channels for the future.

 The e-commerce world is changing rapidly in the digitized world. These e-

commerce developments may have been accelerated by the global
economic downturn which may be driving consumers to find new ways of
reducing their costs of living. The online channel offers a clear value
proposition for both merchants and consumers making it the most sought
after and exciting business model today

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 OFFICIAL SITES OF E-BUSINESS
Flipkart

Website: (www.flipkart.com)

Flipkart is an Indian e-commerce company headquartered in Bangalore,

Karnataka. It was founded by Sachin Bansal and Binny Bansal in 2007. In its
initial years, Flipkart concentrated on online sales of books, but it later on
expanded to electronic goods and a diversity of other products. Flipkart offers
multiple payment methods like credit card, debit card, net banking, e-gift voucher,
and the major of all Cash on Delivery. The cash-on-delivery model adopted by
Flipkart has proven to be of great significance since credit card and net banking
penetration is very low in India.

2. Snapdeal
Website: (www.snapdeal.com)

Snapdeal is a leading online marketplace, headquartered in New Delhi, India.

Snapdeal features products across categories like mobiles, electronics, fashion
accessories, apparel,footwear, kids, home and kitchen, sports, books; and services
like restaurants, spas & entertainment amongst others. The company was started
by Kunal Bahl, a Wharton graduate and Rohit Bansal, alumnus of IIT Delhi, in
February 2010. Snapdeal also provides discounted
deals connecting with local merchants.

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3) Fashionandyou:
Website: (www.fashionandyou.com)

Fashion and You is a private invitation only shopping club, based in Gurgaon,
India. It was founded by Harish Bahl in November, 2009. The fashion site features
collections by top designers for men, women and children for up to 80% off retail
prices. Fashion and You obtain authentic designer merchandise straight from the
brand and provides it exclusively to its members through limited-time events.

4. Myntra:
Website: (www.myntra.com)

Myntra was established by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena
in February 2007. All three are IIT graduates, and have worked for several start-
ups. Myntra is headquartered in Bangalore and has been funded by Venture
Capital funds like IndoUS, IDG & Accel Partners. Myntra.com works as an online
shopping retailer of fashion and casual lifestyle products. The company started off
in the business of personalization of products, and soon expanded to set up
regional offices in New Delhi, Mumbai and Chennai.

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 THE FUTURE OF E-COMMERCE
E-Commerce is the future of shopping.
Thus, is would be apt to quote ―The future is here. It‘s just not widely
distributed yet‖-William Gibson The Internet economy will continue to grow
robustly; Internet users would buy more product and buy more frequently online ;
both new and established companies will reap profits online; and…

• Safer Online Payment Systems: As the Internet becomes a safer place to

transact, the amount spent by the Internet Users online is bound to increase. Those
apprehensive of divulging their credit card and bank details would be active online
shoppers. The Internet users are expected to buy high-end products like
automobile, property, home durables online.

• Customization of content and offerings: As the internet users mature, the

demand for customization will increase. The content would adopt the regional
flavors. More niches will be formed, seeking for offerings made for them and
content that meets their requirements.

• More number of shoppers from Non-Metros: Currently, following the spread

of users coming from Metros and Non-Metros.

By the end of year 2007-08, the contribution from the Non-Metros is expected to
increase. This change would be bought by higher penetration of Internet in the
small towns and limited reach of physical distribution channels of the established
sellers to these towns. These factors coupled with higher disposable income would
compel the Internet users in these towns to buy online.

• Expanding User Base: Going at the current rate of growth in the Internet users
transacting online, the user base for E-Commerce is expected to rise expand
exponentially. A large portion of the Internet population is under the age of 35
years and is increasingly moving northwards as far as the purchasing power is
concerned. The uncanny nature of this segment‖ to use now and pay later‖ is
going to play an important part in the future growth of Way of doing things will
gain precedence.

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• M Commerce: Currently E-Commerce is synonymous with PC and browser-
based interaction. However, in the near future GPRS-enabled mobile phones will
rule the online transactions. Today, online downloads to mobile phones is limited
to low value services like music downloads, picture message downloads and ring
tone downloads. However, as the mobile users get more familiar with buying
online, the purchase of high-involvement products is expected to rise. Certain
verticals like Banking and Finance, Travel, Entertainment, and Retail are likely to
drive the growth of m-Commerce in the country. In the recent past, E-Commerce
and it variants like the m-Commerce have yearned for the position of being the
most important drivers of the Internet.

E-commerce Solutions India

With the growth of e-commerce over the past few years, the number of e-business
solution providers in the industry has also grown drastically, especially in India.
E-commerce can be compared to a 24/7 open shop or a showroom catering to its
clients and buyers. Therefore, a lot of maintenance has to go into it. This is where
the e-commerce solution providers step in, take things in their hands, spend time
and further enhance your business. Conducting business online may sound very
easy as you avoid a lot of unwanted hassles but a lot of skills and innovation is
required to keep it going. E-commerce involves doing market research, getting
qualified traffic, converting hits to business advantages and using information to
generate new e-commerce from existing clients.

The next step for an e-business service provider would be to find a way to
get the visitor on your website to take steps to benefit your business. This is done
by understanding the psyche of the visitor and creating an automated website,
attractive and user-friendly for the visitor. Efficient e-commerce solution
providers will definitely opt for internet marketing to get more visitors to visit
your website..

The web of e-commerce solution providers in India is vast. They offer a

host of e-commerce solution and consulting services to support guide and help
you at each step. Outsourcing e-commerce solutions will help you save time and
resources while you can focus on other important business objectives. Some e-
commerce solution providers also offer BPO services which can be used for
telemarketing and cross-selling to maximize profits. E-commerce solutions are a
big support for businesses today. The demands and the expectations of the end-
users are high and so is the level of competition in the industry.

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 CONCLUSION
The potential benefits offered by e-commerce are far from realized. The
perception that trading on electronic channels cannot make money is challenged
as incorrect, at least in the Business-To-Business sector. There is also some
expectation that, although trading on electronic channels may take longer in the
consumer sector due to the trading barriers on the Internet, this, too, will soon
follow. Electronic channels are forcing companies to re-think major aspects of the
way they are organized and do business. E-commerce raises major strategic issues
and is accelerating developments in areas such as globalization, branding,
customer service, and supply chain. Markets are being transformed as barriers to
entry are torn down.
\
This is an opportunity for the InfoTech and marketing departments to
make their Board aware of the effect of e-commerce not just from the technical
point of view, but also in terms of its impact on the bottom line. In our opinion,
only those companies with an organization-wide initiative, funded from the centre
or, at least, on a joint venture basis between functions, with Board approval, will
emerge as leaders in what is a rapidly changing environment. Senior management
members who have earlier been responsible for the e-commerce initiative in their
organizations need to prepare a compelling business case, detailing the likely
returns on investment, and submit it to the Board. The rewards, both for the
company and for the individual involved in shaping its adaptation to the
information age, promise to be well worth the effort.

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 BIBLIOGRAPHY

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 Department of Electronics 1999, Information Technology Bill along with
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