Friday, 29 November 2013

E Commerce Scenario In India

Indian E-commerce industry has come a long way since the tumultuous days of dotcom bubble. The floodgates were opened by online travel sites like IRCTC and which changed the way Indians book travel tickets. In conjunction with this, rapidly increasing internet user base and rising middle class with disposable income has contributed to the flourishing of industry. Secure online transaction environment, measures like Cash-on-delivery, focus on customer service has motivated Indian consumers to place their trust in online shopping.

The term Electronic commerce or e-commerce consists of all business activities carried on with the use of electronic media, that is, computer network. It involves conducting business with the help of the electronic media, making use of the information technology such as Electronic Data Interchange (EDI). In simple words, Electronic commerce involves buying and selling of goods and services over the World Wide Web. Customers can purchase anything right from a car or a cake sitting comfortably in his room and gift it to someone sitting miles apart just by click of a mouse. Shipping method is generally used for the delivery of the goods ordered.

Ecommerce in India:

The low cost of the PC and the growing use of the Internet has shown the tremendous growth of Ecommerce in India, in the recent years. According to the Indian Ecommerce Report released by Internet and Mobile Association of India (IAMAI) and IMRB International, “The total online transactions in India was Rs. 7080 crores (approx $1.75 billion) in the year 2006-2007 and expected to grow by 30% to touch 9210 crores (approx $2.15 billion) by the year 2007-2008. According to a McKinsey-Nasscom report the e-commerce transactions in India are expected to reach $100 billion by the 2008. Although, as compared to the western countries, India is still in is its initial stage of development.

Scope of Ecommerce:
Home Internet usage in India grew 19% from April 2006 to April 2007. In April 2007 it became 30.32 million and the eMarketer accept that there will be 71 million total Internet users in India by 2011. India is showing tremendous growth in the Ecommerce. Rival have 700,000 registered buyers and it has the growth rate of 35% every year which is likely to double in the year 2008. claims revenues of Rs. 38 crores and has a growing rate of 50 every year. It receives around 500,000 enquiries per month. Undoubtedly, with the middle class of 288 million people, online shopping shows unlimited potential in India. The real estate costs are touching the sky. The travel portals' share in the online business contributed to 50% of Rs 4800 crore online market in 2007-08. The travel portal has attained Rs 1000 crores of turnover which is around around 20% of total e-commerce market in India. Further an annual growth of 65% has been anticipated annually in the travel portals alone.

B2B Transactions:
According to Outlook Business magazine (May 20, 2008), the total B2B transactions in India in the year 2008 are likely to be US$100 billion and B2B marketplaces could account for $15 to $20 billion out of that. India’s largest B2B portal Tradeindia, maintained by Infocom Network Ltd, also stated that e-commerce transactions in India show a growth rate of 30 percent to 40 percent and will soon reach the $100 billion mark. In near future, e-commerce is going to play a major role in multimedia, entertainment and fashion industry. The foreign branded companies are eager to take full advantage of the growing Indian market and are trying to create market for their products over the net. Gucci Co. an Italian iconic fashion and leather goods label is eager to make its hold in India with Business to business transactions. Some of the key B2B exchanges in India are,,,,,, etc.

B2C Transactions:
Although business-to-business transactions play an important part in e-commerce market, a share of e-commerce revenues in developed countries is generated from business to consumer transactions. Railway and Airlines have played a vital role in e-commerce transactions in India. Travel portals are exploding in India. Recently has shown Rs 1000 crores of turnover. Travel alone constituted 50% of Rs 4800 crore online market in 2007-08. In India, online services like ticketing, banking, tax payment, bill payment, hotel room booking, entertainment, online games, matrimonial sites, job sites, etc. are showing signs of development in business-to-customer transactions. There has been tremendous boost in the online business with the stock exchange coming online. Online valentine gifts and Diwali gifts are also becoming popular along with the birthday cakes. No doubt, the total value of the B2B transactions is much larger than that of the B2C transactions, because typically B2B transactions are of much greater value than B2C transactions. It seems that the B2C market in India will take time to grow as compared to the B2B market.

Ecommerce and the Government of India:
The government is aware of the increasing misuse of the electronic media and online frauds. Therefore, the government of India has passed the Information and Technology Act to keep a check on the transactions carried on via the electronic media and to make the process of Ecommerce safe and reliable. The Act imposes heavy penalties and punishment on those who try to misuse this channel for personal benefit or to defraud others. The law has also established the authentication of the electronic records. Increase in the Cyber crimes in Ecommerce is causing concern among the credit card users in India. Now, the government has opened Cyber Crime Police Station. Online complaints can be filed for both cyber and Non Cyber crimes, through an online form which is available at 
to accept complaints filed with digital signatures.

Ecommerce in India: Pitfalls in the way of Ecommerce:
The scope for Ecommerce in India is no doubt tremendous in the years to come, but still there are some pitfalls in its way of success that should be taken care of. They are:

Studies have revealed that 23% of the customers quit even before they register themselves at a particular site because they hesitate to register themselves.
The time of delivery stated is unclear.
The time taken for downloading is very long.
People in India have habit of buying goods only after feeling the goods. This drawback can only be removed if matured companies enter the Ecommerce in whom people have good faith.
The behavior of the Indian customer is very need driven as compared with the US customers who are impulsive buyers.
Most of the entrepreneurs in India lack is sufficient capital or resources and hence cannot wait for a long period of time for positive results.

E-marketplace in India can push Ecommerce:

Electronic marketplace is an online platform or website to facilitate transctions between the buyers and the sellers at organizational level. After a seller registers himself with a particular e-marketplace he can display information regarding his product or services on that portal. Once a buyer registers itself with the e-marketplace he can have access to all the information he wants. It is also known as B2B exchanges. The first e-marketplace in India was established by New Delhi-based SteelNext for trading "mild" or commodity steel in the year 2001. The E-marketplace can:

Reduce the time and cost of interaction for the transcationss.
Facilitate distant trade with efficiency.
Help in the payment procedure.
Help the buyers to find new suppliers and place orders with them.
Create a safe and friendly online deal process.

Mcommerce in India:

Mcommerce is the use of mobile services to interact and transact. Mcommerce is frequently referred as ‘subset of all Ecommerce’; hence while talking about Ecommerce, we cannot ignore the importance of mcommerce in India. In India, there are total 12.45% of mobile subscribers, as compared to the Broadband subscriber penetration of 0.2% and the Internet user penetration of 2.6%. Mobile subscribers can get access to Internet immediately without any plug in. Mcommerce is rapidly becoming an easy and affordable channel for reaching and attracting the customers.

 Since 1991, after economic reforms explicitly took place in India as a result of opening-up of the economywith a view to integrate itself with the global economy, the need to facilitate international trade boththrough policy and procedure reforms has become the foundation st
one of India’s trade and fiscal policies.
Electronic commerce (e-commerce) as part of the information technology revolution became widely used inthe world trade in general and Indian economy in particular. With advancements in technology, there havebeen changes in the methodology for business transactions. India, being a rapid adaptor of technology isapace with the current scenario of electronic data exchanges and has taken to e-commerce. In view of this,this article tries to present a snapshot of the evolution of e-commerce business indicating the chronologicalorder, category of e-commerce business, description of organizations involved in e-businesses in India, keycharacteristics of the firms engaged in e-commerce application, to examine the growth of e-commerce inboth physical and financial terms, to evaluate the benefits obtained from e-business, to critically analyze thebarriers and constraints involved in flourishing e-commerce businesses in India and finally to develop aframework for effective dissemination of e-commerce in India. The role of government should be toprovide a legal framework for e-commerce so that while domestic and international trade are allowed toexpand their horizons, basic rights such as privacy, intellectual property, prevention of fraud, consumerprotection etc are all taken care of.


Nidhi Jain [ MBA eComm]
Asst Project Manager [ eComm]
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