E - Commerce

E-commerce is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. It is believed that entire evolution of e-commerce which took over 50-60 years in the US market, took place within a mere 15 years in India.
Ecommerce was introduced 40 years ago and, to this day, continues to grow with new technologies, innovations, and thousands of businesses entering the online market each year.
Providing security to electronic transactions is one of main reason for expansion of ecommerce. The development of a security protocol – the Secure Socket Layers (SSL) in 1994 provided a safe means to transmit data over the Internet.
E Commerce and changing face of traditional commerce

• Traditional economy is going through gradual process of transforming itself as per norms of ecommerce.In some areas this changes are welcoming but in another it put lot of challenges to come in term with new practices.
• A number of companies and large warehouses are trying to put an electronic outlet to traditional businesses. But there are many challenges like complexities in supply chain which is backbone of all retail .
• Supply chain models of brick-and-mortar retail and online retail are different. Traditional retail chains follow a sequential multi-tier structure-manufacturer, centralised warehouse, regional distribution centres and physical stores, where movement of goods is slow.
• Whereas e-retail does away with multi-tier distribution centre model and ships the item direct from the warehouse to the customer which reduces overhead. At same time, e-retailers have huge pressure to deliver the goods as soon as possible otherwise customer can leave and switch to rival site. But this may not be a case in brick and mortar retail where customer would drive to the store to pick up the item themselves. In e-retails burden of delivery is on e-retailer.
• It shows that logistics can make or mar success of e-retailers, many online retailers, especially the big ones, have set up their own companies or are moving in this direction instead of hiring third-party logistics (3PL) services providers and courier companies. Flipkart has eKart as its logistics arm
• Ecommerce has widen the avenues available to vendors to market and increase their sale. It is not limited to only large firms but even small and medium firms can benefit from internet and computer technology to widen their geographical reach .e.g. tribal products can be marketed online even across national boundaries.
• Given the fact that E-commerce will continue to grow in future as shoppers continue to shift their spending from physical stores to online ones, traditional commerce has to adjust itself and get best out of this revolution.

Opportunities

Changing how business is conducted
E-commerce will change the way business is conducted, traditional intermediary functions will be replaced. It will change the way organisation work.
Virtual Office
Ecommerce has eliminated the need for physical office which is very encouraging for small entrepreneurs as land cost is rising.

Eliminated location barriers
Physical office also put limits over range of geographical areas that can be served, but with virtual office there is no end to areas where you can provide services provided source and destinations need to be well equipped with ICT .
Plethora of Options to Customers
What consumers really want in a economy are options. Ecommerce satisfies that desire because shoppers have the opportunity to choose from an almost endless supply of products, brands, styles.
Rising diversity in ecommerce market
While books, clothes and electronics continue to be the most popular types of products purchased online, other product types that have been typically specific to retail are now fair game for ecommerce.

Challenges in E Commerce for India

It can be studied from perspective of challenges faced by retailers and administrator and regulatory challenges.

Sellers challanges

Personalization: Personalization can be the single most important challenge when it comes to e Commerce. In case of physical retail stores where we used to go as children, the store owners remembered us, our preferences and had that personal touch which is difficult to replace when you are selling online.
Logistic and Shipping Challenges: Issues related to lack of supply chain integration, high delivery charges for products, delay in delivery and lack of proper courier services in some areas also make customers frustrated.
Rapidly evolving Business Models
Business models have been evolving rapidly in the eCommerce sector largely due to heightened competition and the inability of players to sustain high costs. Companies in eCommerce will need to adapt and innovate constantly to sustain their businesses. Several of these companies entered into the eCommerce industry as startups and have grown to a huge size but lack well defined model and organisational structure.
Precise level of planning and accuracy
There’s no buffer in the system for error. An extremely high level of accuracy is required in e-commerce fulfillment. Unlike offline, online customers are far less tolerant of errors in order processing and delivery by merchandisers. E.g. Proper inventory management.

Government- Administrative and Regulatory challenges

E commerce industry being relatively new and growing at fast pace, the change in mindset of the government and law enforcing agencies to understand the uniqueness of this industry is important.
Laws
Laws regulating eCommerce in India are still evolving and lack clarity. Favourable regulatory environment would be key towards unleashing the potential of eCommerce and help in efficiency in operations, creation of jobs, growth of the industry, and investments in back-end infrastructure.
e.g. New Companies act, uncertianity about GST .

Taxation:
National Taxation
Furthermore, the interpretation of intricate tax norms and complex inter-state taxation rules make eCommerce operations difficult to manage and to stay compliant to the laws.
e.g. uncertainty around VAT implications in different states.

Cyber Security and Compliance framework

With the wide variety of audience the eCommerce companies cater to, compliance becomes a serious concern. Companies will need to have strong anti-corruption programs as well as robust compliance frameworks.
Strict check against unfair competition and trade practices.
Future of E Commerce in India
As per demographic profile of internet users testifies that ecommerce will rise rapidly in India in coming years. Around 75% of Indian internet users are in the age group of 15 to 34 years. This category shops more than the remaining population.
In coming years, as internet presence increases in rural areas, rural India will yield more ecommerce business.
Conclusion
India, clearly enjoys a demographic dividend that favours the growth of ecommerce. There is need to improve government policies pertaining to commerce so as to align them with e-business norms. Work is also needed to alter traditional commercial practices and procedures, most of which were formed with a much different image of commerce in mind.

By: Vishal