Embed Size (px)
Citation preview
EMERGENCE OF E-COMMERCE: A POSITIVISTIC CHANGE AGENT OF INDIAN ECONOMY
Ansuman JenaDoctoral Research Scholar
KIIT School of Management, KIIT University, Bhubaneswar, Orissa, India, [email protected]
Biswajit DasAssociate Professor and Chairperson Doctoral Programme
KIIT School of Management, KIIT University, Bhubaneswar, [email protected]
Srikant DasAssociate Professor (IT Management), Head, ICT Cell and CTO
KIIT School of Management, KIIT University, Bhubaneswar - [email protected]
Ipseeta SatpathyAssociate Professor
KIIT School of Management, KIIT University, Bhubaneswar, [email protected]
Mangalika MohapatraResearch Scholar
Utkal University, Vani Vihar, Bhubaneswar, [email protected]
Abstract
India is on the threshold of emerging as a key player in global e-commerce. The potential of
e-commerce is enormous in India, owing to the rapid growth of the number of internet users.
E-commerce enables a transparent and hassle free business environment that allows all stake
holders for buying, selling, marketing, servicing of products, services & sharing of
information over computer networks. The enormous convenience and savings in terms of
money and time achieved by both buyers and sellers is the principal advantage. The Internet
marketing has been increasing around in India since last decade. However, e-commerce has
picked up only recently and online marketing is slowly growing up in India too.
Online sellers compete amongst themselves in a virtual environment for their sustainable
competitive advantage. In this virtual commerce category pure click; click and brick
companies are distinguished from that of brick and mortar companies. Many pure click and
brick and mortar companies today have joined the click and brick bandwagon. The click and
brick business model is the combination of the offline brick and mortar model and the online
pure click model; it is much more complex to manage. In total e-commerce has virtually
taken the business practices by storm including people (buyers, sellers, promoters and
intermediates), policy (privacy, security, legal and taxation) and processes (procurement,
marketing, selling, distribution and information sharing).
This research paper shall attempt to critically analyze the past trends of e-commerce in India
and evaluate the role, scope and contribution of e-commerce towards Indian economy. This
paper also discusses and examines the key turning points paradigm for introspection and
insights for the future growth and prosperity of e-commerce in India.
Key words
E-Commerce, Internet economy, Online marketing, Digital Marketplace, Electronic Data
Interchange
Introduction
Science and Technology has always influenced modes, practices and procedures of
individuals, business and trade as well. The fast changing information technology and
various other technologies has virtually taken the business practices by storm. E-commerce is
becoming the key to success for organizations in the modern era. The use of internet has
made the world relatively small enabling faster business transactions conducted globally on
real time basis. Today all most all countries are working to achieve structural reforms in
society under the key paradigms of liberalization and globalization. The nation’s competitive
power is determined by its strength in science and technology in accordance to economy,
defense, R&D, trade, business practices and also at social level. These technological
revolutions helps in transforming social infrastructure within the nation for its socio-
economic development as well as acting as a vehicle to integrate itself as a part of global
economy.
Global Digital Economy
The internet has created a global digital economy with new opportunities and challenges.
Indian economy is one of the fastest growing economies of the world. In his first visit to India
US President Mr. Barack Obama has rightly said that “India has already emerged as one of
the global economic super power” as India and US joined hands for technology transfer,
business investments and many other strategic partnership. India is on the threshold of
emerging as a key player in global electronic commerce. It is not that internet is new to India
but in fact it has existed here more than a decade. Internet users have grown phenomenally in
the past 5 years and the number of internet users is 16.72 million as on 30 th June, 2010
(Indian Telecom Services Performance Indicators, April to June 2010 by TRAI).
All organizations are making the best use of technology to compete, succeed and sustain in
the emerging internet economy. Computers and internet are now increasingly used to
function as part of the business. Electronic commerce is burgeoning as a means to do
business at a very rapid rate and is also showing every sign of continuous expansion and
growth. It is revolutionizing retail and direct marketing systems to facilitate international
business transactions by reducing the cost for both the producers and consumers. E-
commerce also involves all round electronic methods and procedures to conduct business
activities to achieve the organizational goal. It uses different technologies and embraces a
wide range of services such as electronic banking, electronic trading, electronic cataloguing,
video conferencing, multi-media communications, electronic data interchange (EDI),
electronic mail (E-mail), facsimile (fax) and all forms of messaging between enterprises and
individuals. It combines technologies (internet, EDI, electronic forms, electronic cash and
barcodes), information technology standards (such as WWW, HTTP, FTP, IT act, EDI act),
strategies (Just in time inventory management, efficient consumer response).
History and Development of E-Commerce
Internet has changed the way people buy, sell, hire, promote and organize business activities
in more ways and more vividly than any other technology in the history of business. It
provides tremendous new possibilities for doing business but this challenging new
environment requires a fundamental rethink of traditional strategy and business models
(Evans and Wurster, 1999). The use of electronic networks for trade began in the early 1970s
in the financial sector mainly for electronic funds transfer (EFT). Even the concept of
automated teller machine (ATMs) originated in early 1980s is a part of e-commerce. The ‘80s
also brought the concept of electronic data interchange (EDI) for sharing business documents
like purchase orders, bills and confirmation between organizations and business partners;
which very soon crossed the boundaries of financial sector and started spreading to other
sectors. However the commercialization of internet and World Wide Web (WWW) brought
tsunami, as many companies jumped for e-commerce without giving a second thought.
Visionless and strategy less players incurred huge losses and the tide of e-commerce turned to
be ebb pushing it several steps backward in the year 2000 with dot com burst. Fake
companies and increasing fraudulent activities made the sector very unpopular keeping
serious customers away.
Table – 1
Timeline in the Annals of E-commerce
Sl. No. Year The Milestones
1 1979 Michael Aldrich invented online shopping
2 1981 Thomson Holidays, UK is first B2B online shopping
3 1982 Minitel was introduced nationwide in France by France Telecom and used
for online ordering
4 1984 Gateshead SIS/Tesco is first B2C online shopping and Mrs. Snowball, 72, is
the first online home shopper
5 1985 Nissan UK sells cars and finance with credit checking to customers online
from dealers' lots
6 1987 Swreg begins to provide software and shareware authors means to sell their
products online through an electronic Merchant account
7 1990 Tim Berners-Lee writes the first web browser, WWW
8 1994 Netscape releases the Navigator browser in October under the code
name Mozilla.
Pizza Hut offers online ordering on its Web page.
Netscape 1.0 is introduced in late 1994 SSL encryption that made
transactions secure.
9 1995 Jeff Bezos launches Amazon.com.
First commercial-free 24 hour internet-only radio stations; Radio HK
and NetRadio start broadcasting.
Dell and Cisco begin to aggressively use internet for commercial
transactions.
eBay is founded by computer programmer Pierre Omidyar as
AuctionWeb.
10 1998 Electronic postal stamps can be purchased and downloaded for printing from
the Web.
11 1999 Business.com sold for US $7.5 million to eCompanies, which was
purchased in 1997 for US $149,000.
The peer-to-peer (P2P) file sharing software Napster launches. ATG
Stores launches to sell decorative items for the home online.
12 2000 The dot-com bust.
13 2002 eBay acquires PayPal for $1.5 billion.
14 2003 Amazon.com posts first yearly profit.
15 2007 Business.com acquired by R.H. Donnelley for $345 million.
16 2009 Zappos.com acquired by Amazon.com for $928 million.
Source: Compiled and adapted from Wikipedia
Definition of E-Commerce and E-business Interpreted
Electronic Commerce (EC or e-commerce) describes the process of buying, selling,
transferring, or exchanging products, services, and/or information via computer networks,
including internet. Some people find this definition of e-commerce to be fairly narrow, thus
many use the term e-business instead. E-business refers to a broader definition of E-
commerce, not just the buying and selling of goods and services, but also servicing
customers, collaborating with business partners, conducting e-learning, and conducting
electronic transactions within an organization.
Types of E-Commerce
E-commerce activities fall into identifiable categories and can be classified as per their
business models. This article aims at discussing these categories in brief. They are:
1. Business to Business (B2B): In B2B transactions, both the sellers and the buyers are
business organizations. The vast majority of E-Commerce volume is of this type.
2. Collaborative Commerce (c-commerce): In c-commerce, business partners collaborate
electronically. Such collaboration frequently occurs between and among business partners
along the supply chain.
3. Business to Consumers (B2C): In B2C, the sellers are organizations and the buyers are
individuals.
4. Consumers to Businesses (C2B): In C2B, consumers make known a particular need for a
product or service, and suppliers compete to provide the product or service to consumers.
5. Consumer to Consumer (C2C): In C2C, an individual sells products or services to other
individuals. It is also referred as ‘customer-to-customer’ e-commerce.
6. Intra-business (intra-organizational) Commerce: In this case an organization uses E-
Commerce technology internally to improve its operations. A special case of this is
known as B2E (business to its employees) E-Commerce.
7. Government to Citizens (G2C) also referred as E-Governance: In this case the
government provides services to its citizens via E-Commerce technologies. Governments
can do business with other governments as well as with businesses (G2B).
8. Mobile Commerce (m-commerce): When e-commerce is done in a wireless environment,
such as using cell phones to access internet, it is called m-commerce.
Fig. – 1
A Framework of E-commerce
Source: The above diagram has been compiled and designed corroborating the essential elements pertaining to the highlights of E-commerce with a convergence and empirically innovative contemporaneous sources.
Benefits of E-Commerce
It is a herculean task indeed to list out the benefits of E-commerce but we have tried to
segregate and list those as follows:
1. To Organizations
Expands a company’s marketplace to national and international markets with minimum
capital outlay.
A company can quickly locate customers, the best suppliers and the most suitable
business partners worldwide.
Enables companies to procure material and services from other companies, rapidly and
economically.
Shortens or even eliminates marketing distribution channels, making products cheaper
and vendors’ profits higher.
Decreases (by as much as 90 percent) the cost of creating, processing, distributing, storing
and retrieving information.
Lowers communications costs because internet is much cheaper than other networks.
2. To Customers
Frequently provides information about products and services by allowing consumers to
conduct quick online searches, comparisons and gives more choices in selecting products,
services and vendors.
Enables customers to shop or make other transactions 24 hours a day, from almost any
location.
Enables consumers to get customized products at competitive prices.
Makes possible electronic auctions that benefit buyers and sellers.
Allows consumers to interact in electronic communities and to exchange ideas and share
experiences.
3. To Society
Enables individuals to work from home and to do less traveling, resulting in less road
traffic and lower air pollution.
Allows some merchandise to be sold at lower prices, thereby increasing people’s standard
of living and changing life style.
Enables people to enjoy products and services that are otherwise not available in the
nearby market place.
Helps to share information among individuals and organizations through e-mail, fax and
other superfast communication methods.
Limitations of E-Commerce:
There is no doubt behind the fact that E-commerce has many benefits to cheer but there are a
few limitations of E-commerce too. They are:
Perception that E-Commerce is expensive and unsecured.
Lack of national and international government regulations and universal industry
standards for quality, security and reliability.
Insufficient infrastructure to enrich e-commerce penetration to the bottom of the society.
Increasing legal, taxation, privacy and security issues.
Customer resistance to changing from a real to a virtual store.
E-commerce in India
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.
A. 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/service. The most popular
examples are www.indiaplaza.com, www.thebestofindia.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,
accessories for men and women, health and beauty care products, books, magazines,
computer, mobile phones, accessories, vehicles, 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.
B. Single Product E-commerce
Some Indian portals/websites deal in a specialized field, for example:
1. Automobiles
Examples are: www.indiacar.com and 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 advice, message board…and more.
2. Stock and Share Trading
In India, we can even deal in stocks and shares through e-commerce. Some of the sites
are: www.equitymaster.com and www.5paisa.com. Some of the services offered to registered
members are: online trading 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*7 helpdesk….and more.
3. Real Estate
Portals like 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 and
builders or through consultant or brokers. Allied services like: housing finance, insurance
companies, architects and interior designers, NRI services, property management consultants,
packers and movers, security and maintenance services, Vaastu or Feng Shui consultants…
and more.
4. Travel and Tourism
India has a rich history and heritage, to a large extent in selling India as a brand, encouraging
Indians as well as foreigners to see its multifaceted culture and beauty. A major Government
of India portal www.tourisminindia.com and www.incredibleindia.org 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: passport and
visa, travel and accommodation information, weather information, festival and fair dates,
shopping, tour operators, information on cuisine and restaurants, car rental services…and
more.
5. Gifts
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 one’s lifestyle. One such site
is http://www.indiangiftsportal.com. The gifts are categorized as: collectibles like paintings
and sculptures, luxury items like leather goods, perfumes, jewelry boxes, household curios
and carpets, toys and games, chocolates, flowers, wood craft and metal craft, idols for
worship…and more.
6. Hobbies
The most popular hobbies from time immemorial are reading, music and films. On the Indian
website 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.
7. Matrimony
It is said that marriages are made in heaven, but in the world of E-commerce they are made
on marriage portals like www.jeevansathi.com and www.shaadi.com. 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: astrological services, information on customs and rituals,
legal issues, health and beauty, fashion and style, wedding planners, honeymoon
destinations…and more.
8. Employment
Two major portals like www.monsterindia.com and www.naukri.com are instrumental in
providing job seekers with suitable employment at the click of a mouse. 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.
9. Information Directories
Portals like www.trade-india.com and www.trade.indiamart.com maintain directories giving
trade details on almost any topic, whether it is from apparel to toys, from gems to heavy
machinery and from food to employment. The products and services are listed with
appropriate sub-headings to make it easy for a serious information-seeker to find what he
wants. Some other similar sites are www.indiagrid.com, www.indiainfo.com and
www.indiatimes.com. Allied services provided by them are message boards, chat rooms,
forums, etc.
10. Banks
This is an online banking (net banking and mobile banking) facility available for account
holders. Some of the major Indian players in this field are
www.hdfcbank.com, www.icicibank.com and www.statebankofindia.com. Some of the
special banking services are: demat accounts for sale or purchase of stocks and shares,
foreign exchange services, payment of bills on the account-holder’s behalf, financial planning
and advice, electronic funds transfer, loans to account holders, request for cheque book or
demand draft, NRI services…and more.
Potential of E-commerce in India
It is quite clear from the facts presented so far that the prospect of growth of e-commerce in
India is enormous. “E-commerce is taking off slowly here but I think the Indian market can
experience significant growth over the next few years as 3G services are launched and mobile
broadband gets more ubiquitous,” eBay’s President and CEO John Donahoe said. The growth
rate of Indian e-commerce industry was 30% in 2009-2010 (IMAI report, 2010). Also given
the facts that India’s economy is growing steadily at a GDP of 7.5% and also IT sector
revenue expected to cross USD 73–75 billion in overall software and services revenue by
FY2010 and telecommunication sector’s impressive growth with 300 mn wired and wireless
telephone subscribers, the country has so far lagged behind in popularizing e-commerce.
Upcoming 3G technology will undoubtedly contribute the growth of e-commerce and other
related sectors in India. Thus, E-commerce could be a major contributor for economic growth
of India and taking it much closer to be a developed country.
E-commerce in India – The Real Challenges
Even after a decade of when it first started, ecommerce has not really taken off in India.
People just don’t accept internet as a medium for serious buying. In other parts of the world,
people have been spending money online like they do in any retail store. But Indian internet
user is not that enthusiastic about it. E-commerce in India at present means marketplace
portals which connect sellers and buyers. Although a good concept, the purpose gets defeated
when user experience is not good. These stores have more become a medium for scams than
anything else. They sell duplicate chocolates, watches, perfumes and almost duplicates of all
popular products. These portals have virtually no control over the sellers which leaves users
cheated in the end. It’s bad for the e-commerce industry altogether as cheated first time buyer
turns out to be a last time internet buyer. India is yet to witness a breakthrough ecommerce
success particularly in online retail. There are number of barriers, most of them out of
control, which makes this space difficult to conquer. Travel and Matrimony ventures are
doing relatively good.
Conclusion
No doubt e-commerce application, adoption and popularization are gaining momentum in
India. So far e-commerce is only viewed from buying and selling perspective but it has
greater implications for the economic growth of the country. As they say, the heart of India
lives in rural areas and mostly depend on farming; e-commerce can transform them into
organized and informative farmers. ITC’s e-choupal is the greatest example in this context.
E-commerce enables creation of goods and services anywhere in the country and their
delivery anywhere in the world. Infrastructural reforms along with standardization of legal,
security, taxation and privacy issues can make e-commerce even more popular. It has the
potential to encase the fortune at the bottom line by taking it to the main stream. Global
villages are not far away from the traditional markets. The e-commerce market space is
polluted and needs to be cleaned up. It’s not that wrong kind of people trying to shop on the
internet, it’s just wrong kind of people have set up those shops. Indian internet user trusts the
internet shopping but it just doesn’t trust Indian Internet shops. And it’s definitely not
because someone will misuse their card details, it’s because they don’t get value in terms of
quality, price and service.
References
1. Bellman, L.M. (2001), “Bricks and mortar: 21st century survival”, Business Horizons, 21-
28 pp.
2. Clarke III, I. and Flaherty, T.B. (2004) “Challenges of transforming a traditional brick-
and-mortar store into a bricks-and-clicks model: a small business case study,” Journal of
Electronic Commerce in Organizations, Vol. 2, No. 4, 74-88 pp.
3. Dobie, K., Grant, J. and Ready, K. (2001) “Product motivation and purchasing activity:
an exploratory study of customers’ Internet purchasing activity,” Journal of Promotion
Management, Vol. 6, No. 1, 31-43 pp.
4. Schlosser, A.E. and White, T.B., Lloyd S.M. (2006), “Converting website visitors into
buyers: How website investment increases consumer trust and online purchase
intentions”, Journal of Marketing.
5. Venkatesen, R., Kumar, V. and Ravishankar, N. (2007), “Multi channel shopping: Causes
and consequences”, Journal of Marketing.
6. Child, P., Heywood, S. and Kilger, M. (2002), “Do retail brands travel?” McKinsey
Quarterly, 12-14 pp.
7. Holzwarth, M., Janiszewski, C. and Newman, M.M. (2006), “The influence of Avatars on
online consumer shopping behavior”, Journal of Marketing.
8. Das, B. Pani, A.K. and Satapathy I. (2001), “Online market and emerging trend in E-
Business”, Code no. – 193, national Seminar on Integrating Human Values in Technical
Education, ISET, Dec27-29.
9. Das, B. and Pani, A.K. (2001), “ E-advertisement of sale of house: Mantra of the
Millennium”, Zigyansa, MCA Journal of KIIT, Vol. – I, 12-13 pp.
10. Schneider P. G. (2008), “E-Commerce: Strategy, Technology and Implementation”
Second Indian Reprint, Cengage Learning India PVT LTD
11. Barnes S. and Hunt B. (2002), “E-commerce & V-business: Business models for global
success” Butterworth-Heinemann, 1-4 pp.
12. Blattenberg, RC, Glazer, R and Little, JDC (Eds) (1994) ‘The Marketing Information
Revolution’ Boston: Harvard University Business School Press
13. Hafner, K and Lyon, M (1996) ‘When Wizards Stay Up Late: The Origins of the Internet’
Simon & Schuster
14. Hardaker, G and Graham, G (2001) ‘Wired Marketing: Energising Business for e-
Commerce’, John Wiley and Sons
15. Keegan, WJ and Green, MS (2000) Global Marketing 2nd Edition Chap 15, Global
Marketing Communications Decisions Two, Prentice Hall Inc
16. Kotler, P and Armstrong, G (2000) Marketing, an Introduction 5th Edition Chap 14, Direct
and On-Line Marketing, Prentice Hall, Inc
17. Plamer, A (2000) Principles of Marketing, Chap 20, Direct Marketing, Oxford University
Press
18. Eliqs M. Award (2006) Electronic Commerce from vision to fulfillment, PHI
19. Joseph P. T (2009) E-Commerce: An Indian Perspective, 3rd Edition, PHI
20. Reynolds M. (2007) Beginning E-Commerce, Shroff Publishers & Distributors Pvt. Ltd.
21. Kalakola R. Andrew M. and Winston B. Frontiers of Electronic Commerce, Addison
Wisely.
22. Shurely S. (2008) E-Business with Net-Commerce, Prentice Hall PTR
23. Joseph R. Rich (2009) The Unofficial Guide to start E-Commerce Business, IDG Books
24. Louden K. C and Traver C. G (2005) E-Commerce: Business, Technology & Society,
Pearson Publication
