NATIONAL CONFERENCE ON EMERGING INDIAN SCENARIO

HARNESSING THE OPPORTUNITIES

The focal point of this paper is on the transformation of Brick - Mortal Model of business to
Click- Buy Model using robust online gizmos which has culminated in a new era of commerce
i.e. E-Commerce. This era has brought about an exhaustive shift in the approach towards
business. Vibrant and dynamic Local, Governmental, Infrastructural, Cultural and Economic
factors have contributed to the success of E-Commerce in India. The paper focuses on these
elements which have contributed to the growth, betterment and success of E- Commerce in India.

Contributing Elements For

The Success Of E-Commerce

Keywords: e-business, e-commerce, internet, social network, omnichannel

A New Path Ahead

Kalaivani.S
Lecturer In Commerce
Seshadripuram Institute Of Commerce & Management
Bangalore
kalaivanilissa@gmail.com

6th February 2015

The focal point of this paper is on the transformation of Brick - Mortal
Model of business to Click- Buy Model using robust online gizmos
which has culminated in a new era of commerce i.e. E-Commerce. This
era has brought about an exhaustive shift in the approach towards
business. Vibrant and dynamic Local, Governmental, Infrastructural,
Cultural and Economic factors have contributed to the success of ECommerce in India. The paper focuses on these elements which has
contributed to the growth, betterment and success of E- Commerce in
India.

1
SRI VIDYA INSTITUTE OF TECHNOLOGY,

BANGALORE

Although the trend of e-Commerce has been making rounds in India for 15 years, the
appropriate ecosystem has now started to fall in place from 2000. The e-Commerce market in
India has enjoyed phenomenal growth of almost 50% in the last five years.
The Indian e-commerce industry is likely to clock a compounded annual growth rate
(CAGR) of 35 per cent and cross the $100-billion mark in value over the next five years, a study
conducted by Associated Chambers of Commerce and Industry of India (Assocham) along with
PricewaterhouseCoopers (PwC) has said. According to the study, the Indian e-commerce
industry
is
valued
at
$17
billion
now.
Continuing on the strong growth momentum of 2014, the e-commerce industry is
estimated to see a 67 per cent increase in the average annual spending on online purchases per
individual in 2015, to Rs 10,000 from Rs 6,000 in 2014, the study said.
Additionally, with improvement in infrastructure such as logistics, broadband and
internet-ready devices, there is likely to be a significant increase in the number of consumers
making purchases online, the study said. It estimates around 65 million consumers in India to
buy online in 2015, as against around 40 million in 2014.
The first form of e-business model was business to business (B2B) like matrimonial sites,
job search, directories through online stores Rediff, Timesnow.com etc. But due to constrains
such as low internet penetration, slow internet speed, small user base for online shopping,
inadequate logistics infrastructure, low consumer acceptance and lack of tangible revenue model
killed these businesses at a early stage. But years to come (after 2000) witnessed a radical shift in
consumer behavior and preference, thus giving a new path for cyber ventures in India. E-Tailing
began to generate tangible revenue models through Flipkart,Infibeam, Myntra , Snapdeal, etc. An
addition to this was online ticketing, by Indian aviation and Railway. But the current trend of ecommerce has undergone ocean level changes and in no near future it seems to face the
downfall.
With this kind of staggering and phenomenal growth, it is worth to list out ingredients
which has contributed to the triumph of e-business in India.

BUILDING BLOCKS FOR SUCCESS

As Indian e-commerce looks to accelerate from a slow trot to a gallop, the innovation that
got the sector up and running needs to be discussed. Factors ranging from internet usage to better
infrastructure facilities have enhanced the chances of this sector to grow enormously for times to
come.

The overall environment in which e-commerce operates today is very encouraging and
positive. Factors - local, governmental, infrastructural, cultural and economical has undoubtedly
provided environment for the industry to grow and flourish.
India is the second largest mobile user in the world. According to a report by Statista, an
online statistical portal the number of mobile phone user in India has grown from 416.2 Million
in 2011 to 581.1 million in 2014. By 2017 this number is expected to rise to 730.7 million. With
these ever increasing mobile device users, e-commerce has a large potential market to capture.
Mobile phones and other mobile information and communication technology applications
hold great potential as a basis for powerful customer-operated self-management tools for
searching products online. With this regard e-businesses have developed mobile compatible sites
and application for convince of its faceless customers.
The most challenging part of running an online store isnt setting it up but it is how to
market the business. E-commerce hasnt left any stone unturned to capture the attention of its
possible customers through social networking portal. Social Media adoption among Internet
Users in India is around 84% today. India has about 10.5% social network user penetration
worldwide. Various social networking sites like Instagram, Google+, LinkedIn, YouTube,
Tumblr, Foursquare, Pinterest, Facebook, and Twitter are major strategies for marketing used by
e-tailers today. The ability of these sites to increase networking or work with customers
regardless of distance, presents new models for business.
E-business today is focusing on Omni-Channel retailing, wherein their offline stores
resemble like online store. These offline stores dont insist upon selling; rather gather
information and interest of the customers, so as to capture them online.
Online retailers have access to more information about their customers preferences and
habits. They are intelligently using this insight, to develop personalized and customized products
to their customers. Product personalization poses a huge opportunity for small and medium
enterprises to carve out a niche market and add value to their businesses.
Online business isnt restricted to only traditional goods like electronics gadgets, fashion
& apparels, home dcor, etc but also extends its network to products like unconventional gifts,
drinks or alcohol, handicrafts, Eco-friendly items, etc. these wide variety of products has
broadened the framework of online retailers.
In order to enhance convince of payment for the customers e-business are choosing from
the variety of payment options available online. A few to mention credit card, debit card, direct
deposit and direct debit, online payment services, electronic bill payment services, cheques and
money order.

Online business has provided a great platform for Pre-Used Products. Business ventures
like Amazon.com, OLX, Quickr, e-bay etc has capitalized on Products with Experience. Large
variety of goods ranging from household items to electronic gadgets is available for sale. Theses
online business help to connect buyers and sellers in the most effective manner by overcoming
time, space and physical constrains.
E-commerce provides an easy, quick and cost-friendly gateway to enter into tier II and III
cities of India. With increasing purchasing power, brand consciousness among Gen Y today and
lack of physical outlets of their favorite brand, web business portal is tapping on this untapped
and large probable market. E- Business giants like amazon.com, Flipkart, Snapdeal, Shopclues
etc have pointed out that more than 50% of their sales is contributed by tier II and III cities. The
top five emerging cities include Surat, Kanpur, Ranchi, Coimbatore and Vishakhapatnam. Online
businesses are leveraging on opportunities provided by Tier II and III cities and strongly believe
that they are drivers for their success in future.
Of late breeding and consolidation has been the buzz word among e-business. India has
witnessed M & A of well known e-retailer like Flipkart- Myntra, Yahoo- Book pad , etc. These
moves have paramount importance to achieve synergy and an attitude towards Ready To
Experiment.
Cyber ventures today are thoughtfully overcoming the problem of warehouse
infrastructure. In tier I cities order are met in a maximum of 2 working days and in case of tier II
and III cities this extends up to a week. Most often inventory management is carried out by third
party courier firms, to enhance efficiency in delivery and cost. Logistics management has been
streamlined and re-engineered to cater not only e-business but also customers.
Online retailers have also used array of attractive techniques to grab the attention of its
new born customers. Approaches such as heavy discounts, buy-back offers, returns options,
timely delivery, bulk offers, etc have taken customers to an entire new level of shopping
experience.
Investment is also of paramount importance for the growth of e-commerce. For instance,
Snapdeal received 4627 Million (Rs 3800 Crores) funding from japans investors Softbank.
Flipkart also raised 41 billion through Singapore governments sovereign wealth fund, accel
partners etc.
Translating offline business to online has become considerably easy and cost friendly.
For example web hosting company, GoDaddy, a web hosting service provider, launched a
campaign Cup of Coffee which offered its clients to develop a business website in the time
they finish a cup of coffee. Indian get your business online an initiative by the internet giant
Google helped business and reach out to more people by setting up a website to improve its

creditability and presence. Today more than 200000 businesses have been benefited across 7000
towns.
TO SUM UP
This paper has argued that apart from all the building blocks for success, electronic
commerce has weaknesses: lack of IT infrastructure, security concerns, and early stage of
development, paucity of realistic expectation from the consumers, shortfall of consumer trust and
confidence, absences of value addition, concentrating heavily on discounts and inadequate
encouragement from government. E-commerce still remains only a small part inside the
economic mechanism, representing only a few percent at the macroeconomic level. Effect of
these causes to diminish the impact of electronic commerce but with the increase in Internet
users and ease of access to the virtual world of the Internet, electronic commerce will change the
face of the world.
After taking a holistic view of the industry and its contributing factors of success, ecommerce is poised for an exciting period of exploding growth in a period of three to five years.
This is also expected to lead to substantial change in consumer behavior, infrastructure and
revenue generation model. Considering the current globalization process, this activity will gain
more scale in the coming years.

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