E commerce-- An introduction
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E-commerce, or electronic commerce, involves buying and selling goods and services over the internet and can be categorized into four models: business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), and consumer-to-business (C2B). The Indian e-commerce market is projected to grow significantly, reaching $200 billion by 2026, driven by factors such as increasing smartphone penetration and government initiatives. While e-commerce offers advantages like global reach and convenience, it also faces challenges including high start-up costs, security concerns, and a lack of personal touch in customer interactions.
E commerce-- An introduction
- 1. E-COMMERCE E-CommerceorElectronic Commercemeans buying and selling ofgoods, products, orservices overthe internet. E-commerceis also known as electronic commerceor internet commerce. Theseservicesprovidedonline overthe internet network. Transaction of money, funds, and data are also considered as E-commerce. These business transactions can bedone in four ways: Business to Business (B2B), Business to Customer(B2C), Customerto Customer(C2C),Customerto Business (C2B). Ex: Amazon, Flipkart, Shopify, Myntra, Ebay, Quikr, Olx Types of E-Commerce Models Electronic commerce can be classified into four main categories. The basis for this simple classification is the parties that are involved in the transactions. So the four basic electronic commercemodels are as follows, 1. Businessto Business This is Business to Business transactions. Here the companies are doing business with each other. The final consumer is not involved. So the online transactions only involve the manufacturers, wholesalers, retailers etc. 2. Businessto Consumer Business to Consumer. Here the company will sell their goods and/or services directly to the consumer. The consumer can browse their websites and look at
- 2. products, pictures, read reviews. Then they place their order and the company ships the goodsdirectly to them. Popularexamples are Amazon, Flipkart, Jabong etc. 3. Consumerto Consumer Consumer to consumer, where the consumers are in direct contact with each other .No Company is involved. It helps people sell their personal goods and assets directly to an interested party. Usually, goods traded are cars, bikes, electronics etc. OLX, Quikr etc follow this model. 4. Consumerto Business This is the reverse of B2C, it is a consumer to business. So the consumer provides a good or some service to the company. Say for example an IT freelancer who demos and sells his softwareto a company. Advantages of E-Commerce E-commerce provides the sellers with a global reach. They remove the barrier of place (geography). Now sellers and buyers can meet in the virtual world, without the hindrance of location. Electronic commerce will substantially lower the transaction cost. It eliminates many fixed costs of maintaining brick and mortar shops. This allows the companies to enjoy a much higher margin of profit. It provides quick delivery of goods with very little effort on part of the customer. Customer complaints are also addressed quickly. It also saves time, energy and effort for both the consumers and the company.
- 3. One other great advantage is the convenience it offers. A customer can shop 24×7. The website is functional at all times, it does not have working hours like a shop. Electronic commerce also allows the customer and the business to be in touch directly, without any intermediaries. This allows for quick communication and transactions. It also gives a valuable personaltouch. DisadvantagesofE-Commerce The start-up costs of the e-commerce portal are very high. The setup of the hardware and the software, the training cost of employees, the constant maintenance and upkeep are all quite expensive. Although it may seem like a sure thing, the e-commerce industry has a high risk of failure. Many companies riding the dot-com wave of the 2000s have failed miserably. The high risk of failure remains even today. At times, e-commerce can feel impersonal. So it lacks the warmth of an interpersonal relationship which is important for many brands and products. This lack of a personal touch can be a disadvantage for many types of services and products like interior designing or the jewelry business. Security is another area of concern. Only recently, we have witnessed many security breaches where the information of the customers was stolen. Credit card theft, identity theft etc. remain big concerns with the customers. Then there are also fulfillment problems. Even after the order is placed there can be problems with shipping, delivery, mix-ups etc. This leaves the customers unhappy and dissatisfied.
- 4. (courtesy: www.topper.com) E-COMMERCE IN INDIA The e-commerce has transformed the way business is done in India. The Indian e- commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Much growth of the industry has been triggered by increasing internet and smartphone penetration. The ongoing digital transformation in the country is expected to increase India’s total internet user base to 829 million by 2021 from 636.73 million in FY19. India’s internet economy is expected to double from US$ 125 billion as of April 2017 to US$ 250 billion by 2020, majorly backed by ecommerce. India’s E-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51 per cent, the highest in the world. Market Size Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017 Online retail sales in India are expected to grow by 31 per cent to touch US$ 32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall. During April-June quarter 2019, smartphone shipment in India grew 9.9 per cent year-on-year to 36.9 million shipments. It is expected to reach 160 million in 2019. During 2018, electronics is currently the biggest contributor to online retail sales in India with a share of 48 per cent, followed closely by apparel at 29 per cent. Investments/ Developments Some of the major developments in the Indian e-commerce sectorare as follows:
- 5. In August 2019, Amazon acquired 49 per cent stake in a unit of Future Group. Reliance to invest Rs 20,0000 crore (US$ 2.86 billion) in its telecom business to expand its broadband and E-commerce presence and to offer 5G services. In September 2019, PhonePe launched super-app platform 'Switch’ to provide a one stop solution for customers integrating several other merchants apps. In November 2019, Nykaa opened its 55th offline store marking success in tier II and tier III cities. Flipkart, after getting acquired by Walmart for US$ 16 billion, is expected to launch more offline retail stores in India to promote private labels in segments such as fashion and electronics. In September 2018, Flipkart acquired Israel based analytics start-up Upstream Commerce that will help the firm to price and position its products in an efficient way. As of March 2019, Flipkart launched its internal fund of about US$ 60-100 million to invest from early stage to seed innovations related to e-commerce industry. Paytm has launched its bank - Paytm Payment Bank. Paytm bank is India's first bank with zero charges on online transactions, no minimum balance requirement and free virtual debit card As of June 2018, Google is also planning to enter into the E-commerce spaceby November 2018. India is expected to be its first market. Reliance retail is going to launch online retail this year. It has already launched its food and grocery app for beta testing among its employees. E-commerce industry in India witnessed 21 private equity and venture capital deals worth US$ 2.1 billion in 2017 and 40 deals worth US$ 1,129 million in the first half of 2018. Google and Tata Trust have collaborated for the project ‘Internet Saathi’ to improve internet penetration among rural women in India. Government initiatives Since 2014, the Government of India has announced various initiatives namely, Digital India, Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective implementation of such programs will likely support the e-
- 6. commerce growth in the country. Some of the major initiatives taken by the government to promote the e-commerce sector in India are as follows: Government e-Marketplace (GeM) signed a Memorandum of Understanding (MoU) with Union Bank of India to facilitate a cashless, paperless and transparent payment system for an array of services in October2019. In February 2019, the Government of India released the Draft National e- Commerce Policy which encourages FDI in the marketplace model of e- commerce In order to increase the participation of foreign players in the e-commerce field, the Indian Government hiked the limit of foreign direct investment (FDI) in the E-commerce marketplace model for up to 100 per cent (in B2B models). The heavy investment of Government of India in rolling out the fiber network for 5G will help boostecommerce in India In the Union Budget of 2018-19, government has allocated Rs 8,000 crore (US$ 1.24 billion) to BharatNet Project, to provide broadband services to 150,000 gram panchayats As of August 2018, the government is working on the second draft of e- commerce policy, incorporating inputs from various industry stakeholders. Achievements Following are the achievements of the government in the past four years: Internet subscribers in India stood at 665.31 million in June 2019. In the festive sale (September 29-October 4, 2019), the e-tailers in India achieved US$ 3 billion of Gross Merchandise Value (GMV). Amazon India launched the Amazon Marketplace Appstore which will provide solutions to sellers .
- 7. Value of Unified Payments Interface (UPI) transactions recorded 1.15 billion transaction worth more than Rs 1.913 trillion (US$ 27 billion) in October2019. Under Internet Saathi project over 26 million women were benefitted in India and it reached 2.6 lakh villages and reached 20 states. Under the Digital India movement, government launched various initiatives like Udaan, Umang, Start-up India Portal etc. Under the project ‘Internet Saathi’, the government has influenced over 16 million women in India and reached 166,000 villages Udaan, a B2B online trade platform that connect small and medium size manufacturers and wholesalers with online retailers and also provide them logistics, payments and technology support, has sellers in over 80 cities of India and delivers to over 500 cities. According to the UN’s eGovernance index, India has jumped 11 positions to 107 in 2016 from 2018 in 2014. The government introduced Bharat Interface for Money (BHIM), a simple mobile based platform for digital payments. (Courtesy: www.ibef.org)