BBA – 108

E-Commerce
Unit-1
E- Commerce: Meaning, Nature and Concept
ELECTRONIC COMMERCE
E-commerce is a transaction of buying or selling online. Electronic commerce draws on
technologies such as mobile commerce, electronic funds transfer, supply chain
management, Internet marketing, online transaction processing, electronic data
interchange (EDI), inventory management systems, and automated data collection
systems.
Modern electronic commerce typically uses the World Wide Web for at least one part of
the transaction’s life cycle although it may also use other technologies such as e-mail.
Typical e-commerce transactions include the purchase of online books (such as Amazon)
and music purchases (music download in the form of digital distribution such as iTunes
Store), and to a less extent, customized/personalized online liquor store inventory
services.
There are three areas of e-commerce:
(i) Online retailing,
(ii) Electric markets, and
(iii) Online auctions. E-commerce is supported by electronic business.
Nature of E- Commerce
It has also been described as a “fusion of telecommunications and computing technology
to conduct business. That is the creation and management of relationships between
buyers and sellers, facilitated by an interactive and pervasive electronic medium”. Some
of the main reasons for the increase in electronic trading are:-
(I) The drive to reduce the costs;
(II) Easy accessibility to the Internet;
(III) The lack of regulation on the Internet;
(IV) Access to global markets for vendors;
 (V) Greater choice and potentially lower prices for purchasers;
(VI) Lower inventory costs for vendors;
(VII) The ability to enter new markets more easily.
Examples of E-Commerce
Ecommerce can take on a variety of forms involving different transactional relationships
between businesses and consumers, as well as different objects being exchanged as part
of these transactions.
1. Retail: The sale of a product by a business directly to a customer without any
intermediary.
2. Wholesale: The sale of products in bulk, often to a retailer that then sells them directly to
consumers.
3. Drop shipping: The sale of a product, which is manufactured and shipped to the
consumer by a third party.
4. Crowd funding: The collection of money from consumers in advance of a product being
available in order to raise the startup capital necessary to bring it to market.
5. Subscription: The automatic recurring purchase of a product or service on a regular
basis until the subscriber chooses to cancel.
6. Physical products: Any tangible good that requires inventory to be replenished and
orders to be physically shipped to customers as sales are made.
7. Digital products: Downloadable digital goods, templates, and courses, or media that
must be purchased for consumption or licensed for use.
8. Services: A skill or set of skills provided in exchange for compensation. The service
provider’s time can be purchased for a fee.
Advantages and Disadvantages of E- Commerce
ADVANTAGE OF E-COMMERCE
Today, e-Commerce has revolutionized the way companies are doing business. Now,
consumers can purchase almost anything online 24*7 a day and get an ultimate shopping
experience.
(i) Convenience & Easiness
For many people in the world, e-Commerce becomes one of the preferred ways of
shopping as they enjoy their online because of its easiness and convenience. They are
allowed to buy products or services from their home at any time of day or night.
The best thing about it is buying options that are quick, convenient and user-friendly with
the ability to transfer funds online. Because of its convenience, consumers can save their
lots of time as well as money by searching their products easily and making purchasing
online.
(ii) Offer Product Datasheets
Consumers can also get description and details from an online product catalog. For your
customers, it is very much important to get information about the product no matter
whether the time of day and day of the week. Through information, your customers and
prospects are making decision to purchase your products or not.
(iii) Attract New Customers with Search Engine Visibility
As we all know that physical retail is run by branding and relationships. But, online retail
is also driving by traffic that comes from search engines. For customers, it is not very so
common to follow a link in the search engine results and land up on an ecommerce
website that they never heard of.
(iv) Comprise Warranty Information
No matter whether you are looking to choose including warranty information with
product descriptions and datasheets or providing it from within an ecommerce shopping
cart, you need to make sure that customers must be aware of important terms and
conditions that are associated with their purchase.
(v) Decreasing cost of inventory Management
With e-commerce business, the suppliers can decrease the cost of managing their
inventory of goods that they can automate the inventory management using web-based
management system. Indirectly, they can save their operational costs.
(vi) Keep Eye on Consumers’ Buying Habit
The best thing is e-commerce retailers can easily keep a constant eye on consumers’
buying habits and interests to tailors their offer suit to consumers’ requirements. By
satisfying their needs constantly, you can improve your ongoing relationship with them
and build long-lasting relationships.
(vii) Competence
For effective business transactions, e-commerce is an efficient and competence method.
Setting-up cost is extremely low as compare to expanding your business with more brick
and mortar locations. Very few licenses and permits are required to start-up an online
business than physical store. You can save your lots of money by using fewer employees
to perform operations like billing customers, managing inventory and more.
(viii) Allow Happy Customers to Sell Your Products
With lots of customers’ reviews and product ratings, you can easily increase your sells as
new customers find that your products are good and effective. Make sure that you
mention your clients’ testimonials, reviews and product ratings as such things can help
your new customers to purchase your products.
(ix) Selling Products across the World
If you are running a physical store, it will be limited by the geographical area that you
can service, but with an e-Commerce website, you can sell your products and services
across the world. The entire world is your playground, where you can sell your complete
range of products without any geographical limits. Moreover, the remaining limitation of
geography has dissolved by mcommerce that is also known as mobile commerce.
(x) Stay open 24*7/365
One of the most important benefits that ecommerce merchants can enjoy is store timings
are now 24/7/365 as they can run e-commerce websites all the time. By this way, they
can increase their sales by boosting their number of orders. However, it is also beneficial
for customers as they can purchase products whenever they want no matter whether it is
early morning or mid-night.
DISADVANTAGES OF E-COMMERCE
Running an E-Commerce business is not all rainbows and unicorns. There are challenges
unique to this business model — knowing them will help you navigate the choppy waters
and avoid common pitfalls:
(i) Lack of Personal Touch
Some consumers value the personal touch they get from visiting a physical store and
interacting with sales associates. Such personal touch is particularly important for
businesses selling high-end products as customers not only want to buy the merchandise
but also have a great experience during the process.
(ii) Lack of Tactile Experience
No matter how well a video is made, consumers still can’t touch and feel a product. Not
to mention, it’s not an easy feat to deliver a brand experience, which could often include
the sense of touch, smell, taste, and sound, through the two-dimensionality of a screen.
(iii) Price and Product Comparison
With online shopping, consumers can compare many products and find the lowest price.
This forces many merchants to compete on price and reduce their profit margin.
(iv) Need for Internet Access
This is pretty obvious, but don’t forget that your customers do need Internet access before
they can purchase from you! Since many eCommerce platforms have features and
functionalities that require high-speed Internet access for an optimal customer
experience, there’s a chance you’re excluding visitors who have slow connections.
(v) Credit Card Fraud
Credit card fraud is a real and growing problem for online businesses. It can lead to
chargebacks that result in the loss of revenue, penalties, and bad reputation.
(vi) IT Security Issues
More and more businesses and organizations have fallen prey to malicious hackers who
have stolen customer information from their database. Not only could this have legal and
financial implications but also lessen the trust customers have in the company.
(vii) All the Eggs in One Basket
E-Commerce businesses rely heavily (or solely) on their websites. Even just a few
minutes of downtime or technology hiccups can cause a substantial loss of revenue and
customer dissatisfaction.
(viii) Complexity in Taxation, Regulations, and Compliance
If an online business sells to customers in different territories, they’ll have to adhere to
regulations not only in their own states/countries but also in their customers’ place of
 residence. This could create a lot of complexities in accounting, compliance, and
taxation.
Reasons for Transacting Online
Consumers are accustomed to being instantly connected — to information, to
entertainment, to one another via text message and social media, and to items they want
to buy. With this expectation that nearly every need can be immediately solved with the
help of technology, it’s no wonder that they’ve become so privy to online payments —
and the businesses that accept them.
Here’s a look at the top reasons people prefer online transaction
1. They eliminate geographical boundaries
When a person travels to a different country or continent, they have to adapt what’s in
their wallet. This may include exchanging currency, and even using a different credit card
than they would typically use. Online payments eliminate the obstacles to participating in
a global marketplace.
Many payment processors equip businesses to accept a range of different currencies,
automatically calculate the proper exchange rate based on the type of currency — and
even adapt the language and information prompted in checkout forms to accommodate
the different languages buyers might speak, based on the currency used.
2. They’ve never been more convenient
Payment technology has evolved to the point that consumers can complete an online
payment even if they don’t have a card or physical wallet on hand. In addition to the
increasing popularity of mobile wallets, like Apple Pay, research by Javelin Strategy
indicates that simpler forms of alternative funding (think PayPal or BillMeLater) remain
well received by online consumers. In fact, more than 80 percent of respondents to
Javelin’s study said they’d used one of these card-free payment tools in the last year to
make an online payment.
3. They give consumers more time
Online payments aren’t just convenient in the sense of transaction speed — they
eliminate the need for consumers to travel to a store, invest their time, and wait in line to
pay. Studies on the psychological impact of waiting in line reveal just how precious time
 is to consumers: They tend to overestimate how much waiting will deplete their time by
nearly 40 percent. Whether the amount of time a customer loses from waiting in line is
real or imagined, perception is reality: Online payments deliver a tangible benefit,
simply by offering the buyer a choice of how to spend their time.
4. They provide an additional layer of purchase protection
Buying from a small business, whether in person or online, requires that customers
establish some degree of trust with a merchant with whom they may have no previous
experience. Regardless of how clearly a business communicates its return, exchange, and
customer satisfaction policies, there may be a sense of hesitancy for consumers. Online
payments can overcome this obstacle. When online payments are made using a credit
card that guarantees the lowest price for a stated number of days, extends manufacturer
warranties, and offers a cardholder the right to dispute a purchase, for example, the
customer has peace of mind that they will be protected, regardless of the merchant’s
policy.
5. They replicate their existing financial habits
Online banking has become a tool that more than half of Americans rely on to transfer
funds, pay bills, and track their budgets, according to Pew Research Center. Online
payments replicate the financial habits and behaviors that have become the “new normal”
for so many consumers.
6. They provide cost-free benefits
In addition to all of the benefits customers can gain from online payments, they cost
consumers nothing in return. In a world where so few things are free, online payments
offer consumers a value-added convenience, with no additional investment required.
Though businesses may incur a small fee for accepting credit cards, the fact that
consumers are given the option to pay in the means they prefer will likely negate the
nominal fee that’s involved in the transaction.
Online payments give consumers the hassle-free experience they want at no cost —and
plenty of timesaving benefits. In tandem, they provide small businesses that accept them
with the operational efficiencies they need to meet (and hopefully exceed) customer
expectations.
 Electronic Commerce, Types of E-Commerce
Electronic Commerce
Electronic commerce, or e-commerce, (also written as e-Commerce) is a type of business
model, or segment of a larger business model, that enables a firm or individual to conduct
business over an electronic network, typically the internet. Electronic commerce operates
in all four of the major market segments: business to business, business to consumer,
consumer to consumer, and consumer to business. It can be thought of as a more
advanced form of mail-order purchasing through a catalog.
TYPES OF E-COMMERCE
There are 6 basic types of e-commerce
1.Business-to-Business (B2B)
2.Business-to-Consumer (B2C)
3.Consumer-to-Consumer (C2C)
4.Consumer-to-Business (C2B)
5.Business-to-Administration (B2A)
6.Consumer-to-Administration (C2A)
1. Business-to-Business (B2B)
Business-to-Business (B2B) e-commerce encompasses all electronic transactions of
goods or services conducted between companies. Producers and traditional commerce
wholesalers typically operate with this type of electronic commerce.
 FIGURE:- B2B COMMUNICATION.
2. Business-to-Consumer (B2C)
The Business-to-Consumer type of e-commerce is distinguished by the establishment of
electronic business relationships between businesses and final consumers. It corresponds
to the retail section of e-commerce, where traditional retail trade normally operates.
These types of relationships can be easier and more dynamic, but also more sporadic or
discontinued. This type of commerce has developed greatly, due to the advent of the web,
and there are already many virtual stores and malls on the Internet, which sell all kinds of
consumer goods, such as computers, software, books, shoes, cars, food, financial
products, digital publications, etc.
 FIGURE:- B2C COMMUNICATION
3. Consumer-to-Consumer (C2C)
Consumer-to-Consumer (C2C) type e-commerce encompasses all electronic transactions
of goods or services conducted between consumers. Generally, these transactions are
conducted through a third party, which provides the online platform where the
transactions are actually carried out.

FIGURE:- C2C COMMUNICATION.

4. Consumer-to-Business (C2B)
In C2B there is a complete reversal of the traditional sense of exchanging goods. This
type of e-commerce is very common in crowd sourcing based projects. A large number of
individuals make their services or products available for purchase for companies seeking
precisely these types of services or products.
Examples of such practices are the sites where designers present several proposals for a
company logo and where only one of them is selected and effectively purchased. Another
 platform that is very common in this type of commerce are the markets that sell royalty-
free photographs, images, media and design elements, such as iStockphoto.

FIGURE:- C2B COMMUNICATION

5. Business-to-Administration (B2A)
This part of e-commerce encompasses all transactions conducted online between
companies and public administration. This is an area that involves a large amount and a
variety of services, particularly in areas such as fiscal, social security, employment, legal
documents and registers, etc. These types of services have increased considerably in
recent years with investments made in e-government.
 FIGURE:- B2A/C2A COMMUNICATION
6. Consumer-to-Administration (C2A)
The Consumer-to-Administration model encompasses all electronic transactions
conducted between individuals and public administration.
Examples of applications include:
Education – disseminating information, distance learning, etc.
 Social Security – through the distribution of information, making payments, etc.
Taxes – filing tax returns, payments, etc.
Health – appointments, information about illnesses, payment of health services, etc.
Both models involving Public Administration (B2A and C2A) are strongly associated to
the idea of efficiency and easy usability of the services provided to citizens by the
government, with the support of information and communication technologies.
Electronic Commerce Model, Challenge and Barriers in E-Commerce Environment
Electronic commerce (e-commerce) model helps in the marketing, buying and selling of
merchandise or services over the Internet. It encompasses the entire scope of online
product and service sales from start to finish. E-commerce tools include computer
platforms, applications, solutions, servers and various software formats manufactured by
e-commerce service providers and purchased by merchants to increase online sales.
E-commerce facilitates the growth of online business. It is categorized as follows
 Online marketing
 Online advertising
 Online sales
 Product delivery
 Product service
 Online billing
 Online payments
The 10 Most Common Challenges Faced by E-Commerce
1. Finding the right products to sell
Shopping cart platforms like Shopify have eliminated many barriers of entry. Anyone
can launch an online store within days and start selling all sorts of products.
Amazon is taking over the e-commerce world with their massive online product catalog.
Their marketplace and fulfillment services have enabled sellers from all over the world to
easily reach paying customers.
2. Attracting the perfect customer
 Online shoppers don’t shop the same way as they used to back in the day. They use
Amazon to search for products (not just Google). They ask for recommendations on
Social Media. They use their smartphones to read product reviews while in-store and pay
for purchases using all sorts of payment methods.
Lots have changed including the way they consume content and communicate online.
They get easily distracted with technology and social media.
3. Generating targeted traffic
Digital marketing channels are evolving. Retailers can no longer rely one type of channel
to drive traffic to their online store.
They must effectively leverage SEO, PPC, email, social, display ads, retargeting, mobile,
shopping engines and affiliates to help drive qualified traffic to their online store. They
must be visible where their audience is paying attention.
4. Capturing quality leads
Online retailers are spending a significant amount of money driving traffic to their online
store. With conversion rates ranging between 1% to 3%, they must put a lot of effort in
generating leads in order to get the most out of their marketing efforts.
The money is in the list. Building an email subscribers list is key for long term success.
Not only will help you communicate your message, but it will also allow you to prospect
better using tools such as Facebook Custom Audiences.
5. Nurturing the ideal prospects
Having a large email list is worthless if you’re not actively engaging with subscribers.
A small percentage of your email list will actually convert into paying customers.
Nonetheless, retailers must always deliver value with their email marketing efforts.
Online retailers put a lot of focus on communicating product offering as well as
promotions, but prospects need more than that. Value and entertainment goes a long way
but that requires more work.
6. Converting shoppers into paying customers
Driving quality traffic and nurturing leads is key if you want to close the sale. At a
certain point, you need to convert those leads in order to pay for your marketing
campaigns.
 Retailers must constantly optimize their efforts in converting both email leads as well as
website visitors into customers. Conversion optimization is a continuous process.
7. Retaining customers
Attracting new customers is more expensive than retaining the current ones you already
have.
Retailers must implement tactics to help them get the most out of their customer base in
increase customer lifetime value.
8. Achieving profitable long-term growth
Increasing sales is one way to grow the business but in the end, what matters most is
profitability.
Online retailers must always find ways to cut inventory costs, improve marketing
efficiency, reduce overhead, reduce shipping costs and control order returns.
9. Choosing the right technology & partners
Some online retailers may face growth challenges because their technology is limiting
them or they’ve hired the wrong partners/agencies to help them manage their projects.
Retailers wanting to achieve growth must be built on a good technology foundation.
They must choose the right shopping cart solution, inventory management software,
email software, CRM systems, analytics and so much more.
In addition, hiring the wrong partners or agencies to help you implement projects or
oversee marketing campaigns may also limit your growth. Online retailers must choose
carefully who to work with.
10. Attracting and hiring the right people to make it all happen
Let’s face it, online retailers may have visions and aspirations but one true fact remains,
they need the right people to help them carry out their desires.
Attracting the right talent is key in order to achieve desirable online growth. Also,
having the right leader plays an even bigger role.
Retailers should be out there getting their name out within the online community by
attending e-commerce conferences, speaking at events and networking. Employees want
to work for companies that care about them and their future. Having a sense of purpose
is key.
BARRIERS TO E-COMMERCE
5 Biggest barriers to e-commerce
E-Commerce in India, Transaction to E-Commerce in India
India has an internet users base of about 450 million as of July 2017, 40% of the
population. Despite being the second-largest user base in world, only behind China (650
million, 48% of population), the penetration of e-commerce is low compared to markets
like the United States (266 million, 84%), or France (54 M, 81%), but is growing at an
unprecedented rate, adding around 6 million new entrants every month. The industry
consensus is that growth is at an inflection point.
In India, cash on delivery is the most preferred payment method, accumulating 75% of
the e-retail activities. Demand for international consumer products (including long-tail
items) is growing much faster than in-country supply from authorized distributors and e-
commerce offerings.
In 2015, the largest e-commerce companies in India were Flipkart, Snapdeal, Amazon
India, and Paytm.
Government initiative
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-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:
Reserve Bank of India (RBI) has decided to allow “inter-operability” among Prepaid
Payment Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid
telephone top-up cards.
Finance Minister Mr Arun Jaitley has proposed various measures to quicken India’s
transition to a cashless economy, including a ban on cash transactions over Rs 300,000
(US$ 4,655.1), tax incentives for creation of a cashless infrastructure, promoting greater
usage of non-cash modes of payments, and making Aadhaar-based payments more
widespread.
The e-commerce industry been directly impacting the micro, small & medium enterprises
(MSME) in India by providing means of financing, technology and training and has a
favourable cascading effect on other industries as well. The total size of e-Commerce
industry (only B2C e-tail) in India is expected to reach US$ 101.9 billion by 2020.
Technology enabled innovations like digital payments, hyper-local logistics, analytics
driven customer engagement and digital advertisements will likely support the growth in
the sector. With the increase in the number of electronic payment gateways and mobile
wallets, it is expected that by the year 2020, cashless transaction will constitute 55 per
cent of the online sales. The growth in e-commerce sector will also boost employment,
increase revenues from export, increase tax collection by ex-chequers, and provide better
products and services to customers in the long-term.
TRANSACTION TO E-COMMERCE IN INDIA
Much has been said about India’s accelerated digital transformation. Like the fact that we
are the world’s fastest-growing internet market, adding 40 million users per year on
average. In fact, despite the digital divide, India boasts the second highest active internet
user base with 1 out of 3 people online.
The corollary to this story is the country’s red-hot ecommerce pie, which according to a
new study has the potential to become far bigger, driven by more than 500 million
Indians who will constitute the next wave of online consumers. The size of the
opportunity up for grabs is a whopping Rs 3.44 lakh crore.
The report, titled ‘Unlocking Digital for Bharat: $50 Billion Opportunity’, released by
Bain & Company, Google and Omidyar Network, claims that India has the potential to
unlock over $50 billion in online commerce in India by driving awareness, usage and
transactions among the current and next set of internet users and shoppers.
But the road to get there is far from smooth. Based on a survey of 3,400 customers, the
study puts the spotlight on some major barriers holding India back, beginning with
India’s small transacting user base. Only 40 per cent of India’s 390 million internet users
transact online. The remaining 60 per cent do their research online but complete the
transaction offline.
In addition, there is the worrying number of dropouts. According to the report, 54 million
users – across the affluent socioeconomic segments that comprise 80% of the user base
alone – stop after the first online purchase due to issues with user experience.
Significantly, it takes three to four months for a typical Indian internet user to make the
first online transaction and among users who have been on the internet for two or more
years, 61 percent transact online. The number of “transactors” drops to 27% among new
users, who have been online for just 4-6 months. This underscores the need for
ecommerce players to retain customers through content, experience and fostering trust.
The study points out that India can “double the current product transactor base” by
retaining the number of people who give up after a trial purchase and by beefing up its
current numbers. For the latter, one can start by focussing on the 160M content
consumers who draw the line at online transactions, which has the potential to boost
ecommerce by $14-18 billion.
Then there is the massive non-user base, just waiting to be tapped. The report estimates
370 million non-internet users across India’s affluent socioeconomic strata and 620
million across the mostly-untapped lower income segments. While the latter are out of
the scope of the survey, their sheer numbers spell a massive future opportunity.
“Digital India is at a very interesting point – a large internet user base with significant
variations across demographics, and only a small portion actually transacting online.
While online spends are still low given lower per capita incomes, there is huge potential
to unlock value by addressing user concerns at various stages of the digital curve,” said
Arpan Sheth, partner, Bain & Company, and one of the authors of the report. “However,
 the path won’t be easy for businesses and they will have to innovate and be patient to
monetize this user base and generate value.”
REPORT THIS AD
India Readiness for E-Commerce
After demonetization in India, there is a rapid growth in use us of e-commerce. This
sector was present in India from two decades ago but the boot comes after
demonetization. No doubt it is a growing sector but there is some question still rising i.e.
is India is ready for E-commerce? Govt. of India planning to restrict cash transaction in
limited amount but is everyone is ready for that or we need to think for this again.

India is not ready for E-commerce

 The backbone of Indian economy has come from village areas and these areas are not
aware of e-commerce and online transaction.
 Some areas of India is not connected to the internet and most of the area is suffering from
slow internet speed in this situation the only e-commerce will be a problem.
 E-commerce sector is not very reliable we cannot trust online shopping store completely,
some of them are reliable but there are many cases where peoples are cheated online.
 Cyber security of India is not advance there a chance that with an increase of E-
transaction, cyber-attack will be increased.
 There are a number of people who are not well in using digital apps and computers first
we have to start the campaign to improve people’s understanding of computers.

India is ready for E-commerce

 There is a rapid increase in online transaction and E-commerce which indicates the
awareness among peoples this is the time to push peoples towards e-commerce.
 Online transaction is traceable govt. can identify and can keep a record of the transaction
which will reduce corruption in India.
 Online transaction can reduce the cost of paper currency which will save a lot of money
and paper. E-commerce will also reduce problems of fake currency.
 E-commerce is safe and protected there are various protection and firewalls present in
each layer and due to its traceability refund is possible.
 The world is moving toward the e-commerce and India have to take some step to push
peoples toward e-commerce.
Conclusion
There are some issue and lack of knowledge in peoples but the increasing use of E-
commerce show that peoples are learning e-commerce. There are various benefits of e-
commerce which can help to develop our national economy. Accepting new thing may be
hard initially but it has long-term benefits.
E-Transition Challenges for Indian Corporate
The e-commerce industry in India is growing at a remarkable pace due to high
penetration of internet and sophisticated electronic devices. However, the recent growth
rate of e-commerce in India is far lagging behind than other developed countries. There
are many big problems and challenged on the way of an online merchant. Factors like
safety and security of online money transaction being the biggest problem along with
others, have curb the smooth expansion of the online industry in the country.
Although, major portion of e-business sectors have affected by the below mentioned
challenges but still there are few online giants like Makemytrip.com, flipkart.com,
Snapdeal.com who have overcome the challenges and represents the perfect growth
trends of e-commerce in India.
Major E-Transition Challenges for Indian Corporate:
 Poor Knowledge and Awareness: When it comes to ratio of internet consumers,
scenario is not so admirable one. Majority of Indian rural population are unaware of
internet and it uses. Surprisingly, most of internet savvies or urban population are also
suffering from poor knowledge on online business and its functionalities. Very few are
aware of the online corruption and fraud and thus darkness still exists. A reliable survey
reveals that 50% of Indian online users are unaware of the solution of online security.
 Online Transaction: Most of Indian customers do not possess plastic money, credit card,
debit card and net banking system, which is one of the prime reasons to curtail the growth
of ecommerce. Nevertheless, in recent years, some of the nationalized banks have started
to issue debit cards to all its account holders. This is undoubtedly a positive sign for
Indian online entrepreneurs.
 Cash On Delivery: Cash on Delivery (COD) has evolved out of less penetration of credit
card in India. Most of Indian E-commerce companies are offering COD as one of mode
of payment for the buyers. 30%-50% of buyers are also taking advantage of this mode of
payment while making purchase of any product and service over internet. COD has been
introduced to counter the payment security issues of online transaction, but this mode has
been proving to be loss and expensive to the companies. It is seen that majority of the
customers denied to make the payment at the time of delivery of the product. Hence,
companies tend to lose the sale along with product transit fees. In order to curb the
problem of COD, online companies should take some judicial steps; otherwise basic logic
behind the ecommerce business will be at risk.
 Online Security: In case of start up and small business, Business owners are ignoring the
importance of authentic software due to budget constraints. They are even failing to take
the initial steps to secure and protect their online business through installation of
authentic protection services like antivirus and firewall protection, which indeed a crucial
step for successful online business players. In India, maximum number of business
entrepreneurs used unauthorized software in their server, which usually does not come
with upgraded online security. Such pirated software leaves room for virus, malwares and
Trojan attacks and it is highly risky task to make online transactions in the systems,
which may disclose or leak sensitive details of credit cards and online banking of the
users. These kinds of droopiness should be banned in Indian ecommerce sectors.
Affiliation to SSL certificate should be imposed as a mandatory action for every owner.
 Logistics and Shipment Services: In India, logistics and courier services required lots of
improvement. While, perfect and strong logistics service is one of the key reasons behind
the success of any online company, India is lagging far behind in this sector as most of
the town and small villages are still not covered under serviceable area of many of the
courier and logistic companies. Ecommerce is hampered in a big way owing to the
limited services offered by the courier service companies.
 Tax Structure: Tax rate system of Indian market is another factor for lesser growth rate
of eCommerce in India in comparison to other developed countries like USA and UK. In
those countries, tax rate is uniform for all sectors whereas tax structure of India varies
 from sector to sector. This factor creates accounting problems for the Indian online
business companies.
 Fear factor: Fear of making online payment is a universal psychological factor of Indian
customers. With the spread of knowledge on online transactions and its reliability, some
percentages of customers have overlooked this fear and they are fearlessly engaging
themselves in online shopping. But still, majority of customers are not aware of online
transactions and its security. They often reluctant to disclose their credit card and bank
details and preferred to stay away from online world of shopping.
 ‘Touch and Feel’ factors: Indian customers are more comfortable in buying products
physically. They tend to choose the product by touching the product directly. Thereby,
Indian buyers are more inclined to do ticketing and booking online in Travel sectors,
books and electronics. Companies dealing with products like apparel, handicrafts, jewelry
have to face challenges to sell their products as the buyers want to see and touch before
they buy these stuffs.