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FFAACCTTOORRSS AAFFFFEECCTTIINNGG TTHHEE GGRROOWWTTHH OOFF EE --
CCOOMMMMEERRCCEE AACCTTIIVVIITTIIEESS:: AANN IINNDDIIAANN
PPEERRSSPPEECCTTIIVVEE
IInnttrroodduuccttiioonn
Electronic Commerce, commonly known as e-commerce, has become a buzzword for businesses over
the past few years. With the increase use of computers in various fields and the increase awareness of
communications technologies, e- commerce has indeed gained popularity especially because it helps
to increase effeciency and reduce costs by simplifying business procedures. The potential of e-
commerce is enoromous in India, owing to the rapid growth of the number of internet users. The
enormous saving in time and money achieved by both buyers and sellers is the principal advantage.
The technolgical advancements on all spheres of life are the dricing factors for the spread of e-
commerce in India, as has happened in other parts of the world. (Joseph, 2006)
Selling online has not always been easy in developing countries like India. In 1991, K Vaitheeswaran
founded Fabmart.com now known as IndiaPlaza, India's first e-commerce site. Back then only a small
fraction of the 3m interenet users transacted online. Halting dial-up connections and text browsing
were not cut out for navigating complex payment gateways. Few Indians held credit cards and fewer
still were keen on disclosing their card details. But, nowadays more than 100m surf the web, close to
30m scour for bargains online, and this number grows by 1.5m every month. The industry is worth
around $10 billion today with travel-ticket sales alone accounted for $8.4 billion last year. In 2011,
investors ploughed more than $450m into Indian e-commerce. Flipkart, India's largest online store by
revenue, has so far raised $31m since its commencement in 2007 and the company employs more than
5,000 people. The company aims to hit $1 billion by 2014-2015 with average daily sales of about
$500,000. (Economist, 2012)
In the beginning of the current year, Amazon debuted in India through Junglee.com; a product-
comparison website which aggregates information from different e-commerce sites. There are various
other popular websites for e-commerce market in India.'Snapdeal' , the venture capital of the company
, has reached up to $52m. Myntra, a popular seller of fashion products, has also managed to tap
investors for $40m since its launch in the year 2007. This trend is likely to continue in India. Indians
are young with half of them almost under 25. The country's per capita income has risen by 12%
between 2008 and 2011 to $1,500. The International Monetary Fund(IMF) reckons it will reach
$2.300 by 2016. (Economist, 2012)
Source: (Forbes, 2011), Figure 1: Once more e-commerce is on the lips of entreprenuers and
investors. This time the surge is bigger and better than before.
Nobody saw it coming, nobody wanted it. It was in the year of 1991 Fabmart and Firstandsecond.com
wanted to be the Amazon, the two ginat book stores in India. Rediff was also selling knick-knacks on
its e-commerce channel. Sify had also joined the bandwagon, Apnaloan was promising to 'sell' loans
online, Shaadi.com wanted to find your dream 'other' . In the last ten years, China has created giant-
commerce companies like 360buy, Taobao and Tencent. Russia has Yandex and Mail. Brazil has
Mercado Libre and Buscape. All these companies came about because funding sources in these
geogrpahies did not dry up the way they did in India. Indian e-commerce is playing catch up. The
Figure 1 shows a glimpse of e-commerce industry in India. (Forbes, 2011)
Many beleive that the internet and other advanced digital information and technologies(ADvIT/IS) are
going to the great qualizer between developed and developing countries. Unfortunately, that seems to
be far from the truth. The internet and other ADvIT/IS provide less benefit to developing countries
than to developed countries. The technological infrastructure is easy to put in place. However, the sole
importing of ADvIT/IS is not enough to close that breach. A set of infrastructural deficiencies hinder
the successful accomplishment of the goals that are normally achieved in developed countries when
suing the same technologies. (Kamel, 2006)
E-Commerce has indeed tasted success in India. It has taken Indian Businesses to a new height and
has provided them with much needed global reach and competetive advantage. Moreover, it has also
helped in acquiring new customers, adjusting easily to global reforms, acquiring companies globally,
enhancing foreign product knowledge, reducing the soci-economic factors of the government, and
many other benefits. However, there are certain disadvantages like the product cannot be touch or felt,
expensive items need to be insured before delivery, the products cannot be bargained, delay in
deliveries can happen and many more. These demerits appear negligible when compared with the
merits. Moreover, it is believed that these demerits can be eliminated or improved with time. (Shariff,
2011)
RRAATTIIOONNAALLEE FFOORR TTHHEE SSTTUUDDYY
It is essential to carry out this research as this study will help us understand the movement of
electronic business in India. ‘Internet’ today is a socially acceptable medium where any kind of
information is freely available just with a click away. In most of the developed countries , more than
half of the population uses the web for multiple reasons namely business purposes, online shopping ,
banking, conducting surveys, etc. The growing importance of e-commerce actitivites cannot be
ignored in India. People are becoming increasingly aware of the growing advancement in
technologies . Seeing its multiple use and benefits, many now forsee internet as a boon to the society.
Moreover, their perspective towards the e-commerce has changed. They have now started to embrace
this shift from tranditional business. Furthermore, they now accept that e-commerce provides them all
ease, effeciency and effectiveness. With this research, firstly we will look at the growth and
development of e-commerce in the country chosen for the study i.e. India. Secondlly, we will also
analyse the extent to which people in the Indian market are ready to buy products online or carry out
the business dealings online . In other words, the readiness of Indian buyers for e-commerce will be
analysed. Furthermore, a comparison will also be brought about between the buying tendencies of
cutomers in Indian market and that in the international markets.
The study will also try to fill the gap between what has been written and researched on e-commerce
practices in India and what more can be done to improve the practices of e-commerce activities in
India. Clearly there have been many developments in the country related to the usage of internet by
all class of people. And there also has been a growing trend in the buyer’s readiness and acceptance
towards e-commerce. But, it is also true that many Indian customers still hesitate in sharing their card
details due to security reasons.This study will combine all these information to come up with certain
logical solutions to further boost the e-commerce activities in the country. The research is only based
on ‘India’ though secondary data on other countries will also be used to gain a clear insight into this
topic.
RREESSEEAARRCCHH AAIIMM The aim of this research is to find and analyse the factors that affect the growth of e-commerce
activities in India and suggest the necessary actions to be taken in order to change the traditional
outlook of those who are still skeptical about purchasing online and drive them to use e-commerce on
a frequent basis. This research is likely to be interesting seeing the growing dynamism and importance
of Indian economy in the world. This country is attracting many foreign investors who wish to
conduct business with their Indian counterparts. To add to this, the study will also analyse the past and
present situation of the e-commerce activities in India, the evolution of cusomters in this field, the
buyer’s readiness to disclose confidential information about their debit/credit cards, their preference
of shopping online to physicall visiting market for shopping and their belief in the quality of the
products available online . Furthermore, this study also aims to find the differences in the level of
satisfaction among buyers in India as compared to other countries. It will also help to reflect on the
differences in the mind-set of the consumers in India as compared to those residing in various other
parts of the world.The main focus of this research will be the reasons why , despite of so much of
devleopment in the country, the customers still do not trust the online retail shopping or business
dealings over the web completely. Further, the barriers that has hindered the growth of e-commerce
will also be looked at in this study. It is hoped that the recommendations so provided help overcome
these problems.
As per the published report of Intrenet and Mobile Association od India(IAMAI) on E-commerce
sector in India, a rapid growth of around 50% is expected in the next five years. The expansion mainly
inspired by the continuous rise in the online travel business in India. It has been noticed that online
travel sector increases around 76% in entire E-commerce market today. The Digital downloads
industry is also hoping a rise in this sector because of the outset of mobile devices available on net. E-
commerce market stood at Rs 46,520 crore in 2011. Due to evoultion in online marketing, the entire
E-commerce sector in India is predicted to further rise in near future. All these truly provide a clear
insight into the growing future of E-commerce sector in India. (India Internet, 2012)
According to McKinsey Report, the 'Internet' accounts for about 21 per cent of GDP growth in the
world's largest economies over the last five years. It accounts for about $8 trillion in the global
economy. More than 200 million users are now taking advantage of this service. The report is limited
to online economy in the G-8 countries plus a few more: Brazil, China, India and South Korea . It is
intersting to know the internet economy is growing fastest in the United States, grabbing about 30
percent of global internet revenues. But the UK is the world leader in online retail. Sewden leads the
world in internet's contibution to GDP, while countries like India and China have a peculiar internet
economy in addition to the fastest growing internet sectors. Both the countries rely on exporting
online services for a plurality of their economies. The figure 2 shows the contribution of internet to
GDP in large and developed economies. (The Atlantic, 2011)
Source: (The Atlantic, 2011), Figure 2
RREESSEEAARRCCHH OOBBJJEECCTTIIVVEESS
To look at the factors affecting the growth of e-commerce practices in India.
To understand the cutomer’s perspectives on the usage of internet for online shopping in
India.
To examine the barriers that hinders the growth of e-business in India.
To analyse the practices and improvements being carried out by other countries/economies in
e-commerce and analyse their validity in India .
To look at the customer willingness for E-commerce in India.
RREESSEEAARRCCHH QQUUEESSTTIIOONNSS
Why the majority of customers do not trust online shopping or e-business dealings in India?
Are the Indian buyers completely ready for E-commerce?
Why the e-commerce activties have not reached the status it should have in the Indian
market?
What are the barriers that hinders the growth of e-commerce activities in the Indian context of
business?
What could be done to improve the status of e-business in India? Can other countries prove to
be learning source to India?
22.. LLIITTEERRAATTUURREE RREEVVIIEEWW We all know that the internet economy is revoultionizing the world - in business, in governments, in
society at large. New rules are being written before the ink on yesterday’s rules is dry. Small upstarts
are capturing market share from giant corporations by leveraging the Internet. New markets,
business-to-business electronic marketplaces that broker the sale of goods and services among a
network of customers and suppliers are swiftly reshaping nearly every industry. Competition is
intensifying. Businesses can take nothing for granted except, of course, the certainity of change.
Companies need to be faster, more agile, and crucially, more intelligent. (Liautand, 2001)
According to the Economist Intelligence Unit, Denmark was ranked the best place in the world to do
e-business among the world's 65 largest economies. The factors included broadband and mobile-
phone penetration, as well as government regulation. America rose from sixth to second place in the
ranking since last year. Britain fell from second to fifth place and India despite being an IT
superpower was ranked at 49th position. The figure below shows the rank of India with other
countries in the E-readiness scores. (The Economist, 2005)
Source: (The Economist, 2005)
Another very important use of e-commerce in India is through ‘Online marriage broking’. It is one of
the successes of Indian e-business, used by the single looking foe ''love matches'' as well as by their
parents and siblings. So complex are the requirements of seeking a partner in India that the an e-
business has to be started to help the Indians meet their needs. 'Bharatmatrimony.com' is yet another
website . Then again, these single people and their parents seem no more trustworthy than those
anywhere else. Many may be lying, or may not be lonely at all. Bharatmatrimony claims 7.5m
members and 'Shaadi.com' another matrimony website claims to have 1m visitors in a month. The
internet is spreading fast in India, however taking the brokers with it. The online matchmaking is
reaching beyond India's big cities. The forces of globlisation ,which many Indians fear that they ruin
the tradition, can also bolster it. (The Economist, 2005)
India is growing and growing fast, today it boasts the fastest growing online customer base in the
world, fueled by mobile and PC desktop Web adoption. The country also boasts of the largest
potential audience in the world for social networks. Nielsen has reported that over 45,000 Indians will
join social networking sites each day over the next six months. According to their study, 80% of
Indian social media users spend more than 15 mintues on such sites everyday. India is famous for its
community-oriented culture. Spending time with family and freinds trumps ''me time'' . Moreover,
people rely heavily on their networks to discover what is new and what is worth spending time and
energy on. With over 50 million registered users, India is the second most-represented country on
Facebook and the sixth most represented country on Twitter. (Forbes, 2012)
Now in terms of thereotical context to present in the literature review of this research. We will look at
the follwing: There is a tendency when setting online sales objectives, to use a low-risk approach of
selling existing products into existing markets. This is called the ‘market penetration’ approach shown
in the figure below which may as well be called as the ‘Ansoff Matrix’’. This approach is used by
marketers for over 40 years to determine strategic priorities. It is very important to identify the
strategies that is to be used while targeting the customers using the medium of the internet. Below is a
figure which shows the online opportunities for product and market innovation. (Chaffey, 2008)
Source: (Chaffey, 2008)
Today India is getting flooded with pushy startups even while web-based sales remain a silver of the
overall retail market. Sudhir Sethi of IDG Ventures India reasons that e-commerce is set to take off
now that Indian e-retailing sales are about to tip past the $1 billion mark. Several e-commerce
companies from India will go public again taking a cue from China, He predicts. Flipkart, a well
known e-retailer is aiming for $150 million in sales and a 50% market share by 2015. Many e-retailers
started off 2012 with a bang, raising $150 million from Accel, IndoUS and TigerGlobal and then
expanding into newer turf by acquiring Letsbuy, a specialised e-commerce site selling digital gadgets.
In the Indian e-commerce market's growing maturity, specalised e-commerce sites have now emerged
too in the country like the host of social commerce(think GroupPon) players, with Snapdeal being the
most visible and the one to beat. Another one called Startup Asia which is a Bnaglore-based Myntra,
an online retailer of Indian fashion and lifestyle brands. (Forbes, 2012)
33.. RREESSEEAARRCCHH DDEESSIIGGNN AANNDD MMEETTHHOODDOOLLOOGGYY
RREESSEEAARRCCHH DDEESSIIGGNN:: DDEEDDUUCCTTIIVVEE AAPPPPRROOAACCHH TTOO LLAARRGGEE EEXXTTEENNTT The methodology used in the study will be a ‘Mixed Method Strategy’ in this case . There will be a
lot of use of ‘secondary research’ in forms of facts/figures, theories, past and present figures. Also,
the offical financial websites like The Economist, Forbes, The Financial Times, etc. will be used to
find relevant data for the study. The other books and journals from academic sources will also be used
for the same. The research design will be more of a ‘deductive approach’ as it is often associated with
quanitative type of research while inductive approach has more of primary research.. The primary
research here will be limited to acquiring information from organizations through questionnares. It is
believed that combining both the research designs for a particular study can result into more in-depth
fingings and a better explanation to the topic. But looking at the topic chosen for the research, more
of ‘secondary research’ fits well with the idea of taking up this research. As deductive approach is
well suited with the quantitative methodology, quantitative method in this research will be carried out
by sending questionnaires in the organizations to find out where the employees/employer sees the
status of e-commerce going in India.
RREESSEEAARRCCHH MMEETTHHOODDOOLLOOGGYY As mentioned before, there will be a mix of primary as well as secondary research. Primary research
will be done through ‘questionnaires’ and secondary research will be carried out by extracting facts
and figures from various academic sources and official website online. The information so found will
cover both the past and present scenario of e-commerce activities in India. Now questionnaires will be
sent to the organizations as mentioned above to gain the perspective of the employees/employer on e-
commerce activties in India . Furthermore, the questions so asked will also help in extracting
information like whether they are using this approach in their organizations and whether they think
there could be more development to uplift the activities of e-business in India. Talking about the type
of metholdogy chosen for the study, it is often said that one type of research can be extremely limiting
that is why the strengths of both the methodlogies should be well incorporated in this particular study.
(Onwuegbuzie, 2005) The sampling technique used in this research would be ‘Convenience
Sampling’ which will be for the participants~(employees/employer) who will fill out the
questionnaires in the organizations.
DDAATTAA CCOOLLLLEECCTTIIOONN TTEECCHHNNIIQQUUEESS As mentioned before, there will be a mix of primary data collection and secondary data collection
method. However, there will be more use of secondary data here.Both the negative as well as the
positive aspects of e-commerce in India will be covered. This will help in bringing forth the right
future of E-commerce in India accurately. Primray data collection method will be done through
questionnaires. These questionnaires then will be samples through ‘Convenience Sampling
Technique.
44.. LLIIMMIITTAATTIIOONNSS OOFF TTHHEE SSTTUUDDYY
Limited information might be available on the e-commerce activities in the Indian market as
it is very specific and the author is not taking into account the global scenario of the e-
commerce practice as the topic.
Due to time constraint it might not be possible to send out questionnaires in the organizations
as there is a limited period of time given to finish this particular study.
The author will be doing the study in India so it is possible to not have an access to a wide
variety of books and information from various articles and journals. Though the author will
try to utilise the use of library journals online from India.
55.. EETTHHIICCSS The ethics in this research will be the protection and confidentiality of the employees/employer who
will be filling the given questionnaires for this study. The participants of these organizations will be
informed before hand about the nature and type of this research as to avoid any conflicts or disputes.
This is a research project that is why there will be a continuous communication with the supervisor
about the nature and type of the work. The author is aware that it is unethical to be secretive and
dishonest about the research work from your supervisor. (Wilson, 2010)
66.. VVAALLIIDDIITTYY AANNDD RREELLIIAABBIILLIITTYY The research will make use of ‘Internal validity’ which is of two types: ‘Content’ and ‘Construct’.
The content validity is concerned with face validity and sampling validity. (Wilson, 2010) A part of
construct validity will be used for quantitative data which is in form of questionnaires here in this
study. In terms of reliablity , this research will be shown to the supervisor before hand in order to
seek his guidance on the relaiability and vaildity of the research and to obtain the final approval from
him in order to proceed with the research project.
CCoonncclluussiioonn
Jack Welch rightly said, “Any company old or new that does not see this technology as important as
breathing could be on his last breath.” It is indeed a win-win situation for those companies who have
entered into this new billion dollar industry in India. E-commerce has huge potential in Indian market
which is evident from its tentacles spreading in almost all types of industry from the fashion world to
even the matrimonial match makers. All seem to be benefitting from this business. With the
advancement and development of e-commerce in India, the innovations in security and confidentiality
in payment methods have also been seen. Services like Google Checkout assure the customers to save
their critical data securely and relieve them from the hassles of remembering the credit card details or
bank details. Moreover, alternative payment methods like PayPal have also added to the convenience
in online shopping.
The popularity of this business has forced out various other innovations as well. There are websites
available now which allows you to compare the ratings of various products and services. There are
those who are offering daily deals online. Local Search engines like Just dial has helped the sellers to
reach out to wider range of customers while they also allow customers to find out about various
options in their locality thereby bringing both the buyers and sellers together to facilitate further trade.
The e-traders are also using the growing craze of social networking websites to their advantage. They
are asking customers to share, rate and recommend their services or products to their friends in social
websites like Twitter, and Facebook. M-commerce, another logical extension of e-commerce, has
taken e-commerce to another level of portability and convenience wherein the customers now have
same website based services on their mobile phones. Amazon and Apple have been the first movers in
this innovation.
Undoubtedly this industry is likely to be a multi-billion industry in no time in India. E-commerce is
becoming a part and parcel of everyone’s lives and its growing every minute. At such, it will be
extremely difficult to exact loyalty from the customers. Hence, it is important for the sellers to follow
the strategy of market-penetration wherein the seller should compete more effectively to penetrate
further in the existing market with the existing product. New schemes should be introduced to
maintain their hold on the customers’ loyalty towards their brands. Moreover, the sellers should also
keep pace with their competitors as the customers are becoming increasingly price-sensitive in this
highly competitive market.
Lastly, the time has proved that e-commerce is no fad but the base of uncountable innovations and
multiple extensions. To survive and grow in this market, one has to be quick both with their thoughts
and actions. In a matter of no time, everything will be the “e” way in this soon to be the “e” world.
(mbahack.com, n.d.)
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