ISSN: 2278-6236 Growth and Challenges of E - Tailing in India

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International Journal of Advanced Research in ISSN: 2278-6236

Management and Social Sciences Impact Factor: 4.400


Vol. 4 | No. 2 | February 2015 www.garph.co.uk IJARMSS | 18
GROWTH AND CHALLENGES OF E -TAILING IN INDIA
Dr. Vijetha Mukkelli*
Abstract: E-tailing is a form of electronic commerce which allows
consumers to directly buy
goods or services from a seller over the internet without intermediary
service. The global e-
tailing industry has undergone a lot of transformation over the past two
decades. The Indian
retail experience has gone beyond the traditional brick–and-mortar
store and E-commerce in
India has been experiencing remarkable growth, successfully
changing the way people
transact.
Transformation in the trends of shopping is taking place because of
the changing lifestyle of
the consumers in India and expansion in online activity. Major draw
card of online shopping
is the ease and discounts given on different products. Today, the
online shopping has
become a trend in India and the reason behind the adoption of this
technique lies in the
attractive online websites, user friendly interface, bulky online stores
with new fashion, easy
payment methods, no bound on quantity & quality, wide choice
regarding the items based
on size, color, price, etc The present paper studies about the role and
growth of E-Commerce
in India. The reasons for its fast growth and the advantages of online
shopping are briefly
discussed. The study is made through literature survey.
Keywords: Cash on Delivery, Challenges E-tailing, E-commerce,
Growth.
*Prof & Dean, School of Management Sciences, Nalla Narasimha
Reddy Education Society’s
Group of Institutions, Hyderabad, Andhra Pradesh, India
International Journal of Advanced Research in ISSN: 2278-6236
Management and Social Sciences Impact Factor: 4.400
Vol. 4 | No. 2 | February 2015 www.garph.co.uk IJARMSS | 19
INTRODUCTION
E-tailing or e-retailing or online retailing is a form of electronic
commerce which allows
consumers to directly buy goods or services from a seller over the
internet without
intermediary service. Alternative names that are used for this are
Internet Shop, Web-Shop,
Web-Store, E-Web-Store, E-Shop, E-Store, Online Store, Online
Storefront etc. English
entrepreneur Michael Aldrich invented online shopping in 1979. His
system connected a
modified domestic TV to a real-time transaction processing computer
via a domestic
telephone line. The global online retail industry has undergone a lot of
transformation over
the past two decades. The Indian retail experience has gone beyond
the traditional brick–
and-mortar store and E-commerce in India has been experiencing
remarkable growth,
successfully changing the way people transact. Customers are
attracted to online shopping
for various reasons like high levels of convenience, broader
selections, competitive pricing,
and greater access to information. Business organizations seek to
offer online shopping
because of much lower cost compared to bricks and mortar stores,
offers access to a
worldwide market, increases customer value, and builds sustainable
capabilities. Nowadays
virtual stores in India are not limited to one or other kind of a specific
product but sell all
kinds of material ranging from home décors, designer clothes, highly
expensive products like
jewelers. E-commerce has become very popular in the areas of
computers, electronics and
their accessories, apparel, arts and handicrafts, books, car rentals,
matrimonial, cosmetics,
financial services, gifts and novelties etc. The E-retailers are
successful in maintaining the
faithful relations with online consumers in the internet by being able to
integrate the
conventional supply chain with order management from the web.
TYPES OF E-COMMERCE SYSTEMS
There are multiple types of E-Commerce systems namely
 Business-to-Consumer (B2C): Companies sell their online goods to
consumers who
are the end users of their products or services.
 Business-to-Business (B2B): Companies sell their online goods to
other companies
without being engaged in sales to consumers
 Consumer-to-Business (C2B): Consumers usually post their
products or services
online on which companies can post their bids. A consumer reviews
the bids and
selects the company that meets his price expectations.
International Journal of Advanced Research in ISSN: 2278-6236
Management and Social Sciences Impact Factor: 4.400
Vol. 4 | No. 2 | February 2015 www.garph.co.uk IJARMSS | 20
 Consumer-to-Consumer (C2C): Consumers sell their online goods to
other
consumers.
Of all the above, the B2C (Business to Consumer) constitutes most
important part of online
shopping.
GROWTH OF E-COMMERCE IN INDIA
The new chapter began in the history of the online world in 1991when
e-commerce became
a hot choice amongst the commercial use of the internet. IRCTC
(Indian Railway Catering
and Tourism Corporation), a subsidiary of the Indian Railways, is the
first ever application of
e commerce in India. The government of India has made an
experiment for internet based
rail ticket booking through its website and from mobiles via GPRS
(General Packet Radio
Service and SMS (Short Message Service). This Online Passenger
Reservation System,
facilitated the public to book their tickets from anywhere and at
anytime in the country just
with a click and through easy payment. Also, they can check the
status of the ticket and
availability of the train as well. This is a big achievement in the history
of India in the field of
E-Commerce. After the unpredicted success of the IRCTC, the online
ticket booking system
was followed by the several airlines such as Air Deccan, Indian
Airlines, and Spice jet. This
online booking facility is now available with almost all transport
organizations both in
private and government sectors.
The success of online booking of tickets on a large scale by the Indian
people motivated
other business players to try this technique for their E-businesses, to
expand sales volumes
and thereby to gain high profits. Though online shopping has been
present since 2000, it has
gained popularity only with the introduction of deep discount model of
Flipkart in
2007.After that, several other portals like Amazon, Jabong, etc.
started hunting Indian
consumer for the expansion of their sales. . On 7 March 2014 e-tailer
Flipkart claimed it has
hit $1 billion in sales, a feat it has managed to achieve before its own
target of 2015. India's
e-commerce market was worth about $3.8 billion in 2009, it went up to
$12.6 billion in
2013. In 2013, the e-retail market was worth US$ 2.3 billion. About
70% of India's e-
commerce market is travel related. India has reached close to 10
million online shoppers
and is growing at an estimated 30% CAGR vis-à-vis a global growth
rate of 8–10%.
Electronics and Apparel are the biggest categories in terms of sales.
According to an
Associated Chambers of Commerce and Industry of India survey, the
online retail market in
International Journal of Advanced Research in ISSN: 2278-6236
Management and Social Sciences Impact Factor: 4.400
Vol. 4 | No. 2 | February 2015 www.garph.co.uk IJARMSS | 21
India may grow to Rs 70 billion (over $1.30 billion) by 2015 from Rs 20
billion in 2011 as
internet access improves.
The reasons for the fast growth of Online Shopping in India
There are multiple reasons for the fast growth of ecommerce in India.
The changing
consumer lifestyles, supported by the younger population base of
India, have given a boost
to the e-commerce business. More than half of the total 1.2 billion
population of India falls
under the ‘below 25 years of age’ bracket. The typical Internet user of
the twentieth
century is young, professional, and affluent with higher levels of
income and higher
education (Palumbo and Herbig,1998). E-Commerce was also
changing with mobile
payments taking shape.
Indian consumers are much more cautious about shopping online as
compared to the West.
They are reluctant to divulge credit card details. The cash on delivery
(COD) service has
helped a lot of traditional consumers turn to online shopping. It is
believed that more than
50% of all online transactions in India are based on the Cash on
Delivery (COD) payment
methodology. The most important reason, above all, for the fast
diffusion of online
shopping is increasing broadband Internet and 3G penetration. India
has an internet user
base of about 250.2 million as of June 2014. The penetration of e-
commerce is low
compared to markets like the United States and the United Kingdom
but is growing at a
much faster rate with a large number of new entrants. The industry
consensus is that
growth is at an inflection point. The internet can provide consumers
with up-to-the minute
information on prices, availability etc. (Franz 2000).
Consumers may benefit from the shopping process being faster in the
market space than in
the market place as a result of the rapidity of the search process and
the transactions
(Wigand & Benjamin 1995, Krause 1998). People today can shop
literally everywhere within
minutes, be it their workstations or homes, and most importantly, at
any time of the day at
their leisure. The online market space in the country is rapidly
expanding in terms of
offerings ranging from travel, movies, hotel reservations and books to
the likes of
matrimonial services, electronic gadgets, fashion accessories and
even groceries.
The increasing number of middle class with high disposable incomes
and rising standards of
living is another reason for its growth. Confirmatory work shows that
income and
purchasing power have consistently been found to affect consumers’
propensity to shift
International Journal of Advanced Research in ISSN: 2278-6236
Management and Social Sciences Impact Factor: 4.400
Vol. 4 | No. 2 | February 2015 www.garph.co.uk IJARMSS | 22
from brick-and-mortar to virtual shops (Co-mor, 2000). Another reason
is - busy lifestyles,
urban traffic congestion and lack of time for offline shopping. They
value time more than
money which automatically makes the working population and dual-
income or single-parent
households with time constraints better candidates to be targeted by
non-store retailers
(Burke, 1997).
Availability of much wider product range compared to what is available
at brick and
mortar retailers. By allowing consumers to shop in many places and
conduct quick
comparisons of offerings and prices (Hoffman et.al. 1995, Hart et al.
2000), Internet market
places have the ability to reduce search costs for price and product
information (Bakos
1998, Strader & Shaw 1999, Rowley 2000, Bhatt & Emdad 2001).
Lower prices compared to
brick and mortar retail driven by disintermediation and reduced
inventory and real estate
costs, increased usage of online classified sites, with more number of
consumers buying and
selling second-hand goods multiplied its applications. The introduction
of Return Policies
ranging from 7–30 days, free home delivery and the “cash on delivery”
model have led to a
lot of momentum in Internet sales and changed people’s perception
towards online
shopping as shoppers can now purchase without disclosing their
credit/debit card details.
The e-commerce sector in India is estimated to have hundreds of
players. To capture a
larger pie of the growing Indian e-commerce market, most of these e-
tailers are constantly
innovating, increasing their offerings and providing better deals.
Further, the addition of
discounts, coupons, offers, referral systems, 30days return guarantee,
1-7 days delivery
time, etc. to the online shopping and the E-Market have added new
flavors to the industry.
Challenges and Future of E Tailing in India
Most people in India don’t trust in online shopping till now because of
several solid reasons,
which contains some rumors and some bad experiences of the people
too. Many are of the
opinion that their cash cards or debit cards may be hacked. But this is
an illusion only. This
can be completely avoided by using own computers or laptops instead
of doing it in
cybercafé. Only trusted browsers like Internet Explorer, Google
Chrome or Mozzila Firefox
should be used to make a purchase online. It is suggested to all online
sellers, having doubts
in their mind, to give an option of Cash on Delivery. The pioneer in e-
tailing in India,the
Railway department, has also made available this option to its
passengers. Now, a rail ticket
can be booked online and get it delivered at home where the payment
can be made.
International Journal of Advanced Research in ISSN: 2278-6236
Management and Social Sciences Impact Factor: 4.400
Vol. 4 | No. 2 | February 2015 www.garph.co.uk IJARMSS | 23
Initiating this “cash on delivery” (CoD) system rail ticketing, IRCTC is
targeting those
customers who are reluctant to use their credit or debit cards as well
as those who don’t
have net-banking facility. This scheme has been launched on pilot
basis in February 2015
and the service will be available in more than 200 cities initially.
Customers can book a ticket
5 days prior to commencement of journey. While Rs 40 will be
charged for the delivery of
each Sleeper Class ticket, Rs 60 will be charged for an AC class
ticket.
Apart from the above,several new customers are afraid of additional
shipping charges. They
should compare these charges with other sites, if all other things
remain same. There are
some e tailers who are shipping at free of cost while some others are
charging nominal
charges. Prospective customers can search for such sites while
making a purchase.
Another major challenge is lack of opportunity for physical verification
of the product. This
will lead to the fear of receiving fake or used or broken products. But
in most cases this kind
of things will take place only by mistake. In such instances, customer
care team can be
contacted. Otherwise, almost all the companies are providing with
‘Return and Refund’
facility. But the terms and conditions should be carefully read before
the purchase itself.
There is less possibility of mistakes in case of branded products.
Moreover, Customer
Reviews can help the people in reducing risk.
Online shopping is still at its budding stage in India. But economists
are forecasting a very
significant growth in this field in the coming years. It is estimated that
online shopping
industry will probably touch USD 34.2 billion by 2015. At present,
people shop online not
only through laptops and desktops but use their mobile phones as well
for the same and the
coming years will see a huge consumer base in this category, India's
retail market is
estimated at $470 billion in 2011 and is expected to grow to $675
Billionn by 2016 and $850
Billins by 2020. In order to survive, e-commerce players need to make
a quick turnaround
and minimize fixed costs as much as possible. Accordingly, different
companies are resorting
to different business models. Nevertheless, operating in a highly
competitive environment
with very low margins is not an easy job.
CONCLUSION
Today, the online shopping has become a trend in India and the
reason behind the adoption
of this technique lies in the attractive online websites, user friendly
interface, bulky online
stores with new fashion, easy payment methods, no bound on quantity
& quality, wide
International Journal of Advanced Research in ISSN: 2278-6236
Management and Social Sciences Impact Factor: 4.400
Vol. 4 | No. 2 | February 2015 www.garph.co.uk IJARMSS | 24
choice regarding the items based on size, color, price, etc. In spite of
being a developing
country, India has shown a commendable increase in the ecommerce
industry in the last
couple of years, thereby hitting the market with a boom. Though the
Indian online market is
far behind the US and the UK, it has been growing at a fast phase.
Today, the booking
system is not just limited to the transportation rather hotel bookings,
bus booking etc. are
being done using the websites like Makemytrip and Yatra. Overall e-
commerce market is
expected to reach Rs 1, 07,800 crores (US$24 billion) by the year
2015 with both online
travel and e-tailing contributing equally. Another big segment in e-
commerce is mobile/DTH
recharge with nearly 1 million transactions daily by operator websites.
Thus, the online
shopping may become a way of life in the years to come.
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Management and Social Sciences Impact Factor: 4.400
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