CHAPTER 2

CONCEPTUAL FRAMEWORK

As this research focuses on e-tailing in India, it is necessary to review the

existent literature on e-commerce. Therefore, this section aims to introduce
the body of knowledge on e-commerce and e-tailing, covering the issues of
benefits and limitations, applications, the development of e-commerce in
India, and the barriers to the development of e-commerce in India. The
chapter also covers success factors for e-retailing.

2.1 Introduction to E-Commerce

2.1.1 Definition of E-Commerce

Today e-commerce became a symbol of globalization and in many ways its
leading feature, e-commerce represents the cutting edge of success in this digital
age. E-commerce stands for electronic commerce and relates to trading in goods
and services through the electronic medium, i.e. the Internet or phone. On the
Internet, it pertains to a website, which sells products or services directly from the
site using a shopping cart or shopping basket system and allows credit card
payments. It involves conducting business with the help of the electronic media,
making use of the information technology such as Electronic Data Interchange
(EDI). In simple words, Electronic commerce involves buying and selling of
goods and services over the World Wide Web. Customers can purchase anything
right from a car or a cake sitting comfortably in his room and gift it to someone
sitting miles apart just by click of a mouse.

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Several researchers has made attempts to define e-commerce. Some of those
definitions are presented hereunder.

According to Zwass (1998), “e-commerce is the sharing of business information,

maintaining business relationships, and conducting business transactions by
means of telecommunications networks”

In the year 2003 Laudon & Traver defined E-commerce as the use of the internet
and the web to transact business. More formally, digitally enabled commercial
transactions between and among organization and individuals. In the same year
two another prominent thinkers Kotler And Chaffey defined e-commerce “as in
addition to providing information to visitors about the company, its history,
policies, products and job opportunities, the company or site offers to transact or
facilitate the selling of products and service online” and “All electronically
mediated information exchanges between an organization and its external
stakeholders” respectively While in the year 2006 Schneider defined e-commerce
as business activities conducted using electronic data transmission over the
internet and the world wide web‟

E-commerce (electronic commerce or EC) is the buying and selling of goods and
services on the Internet. In practice, this term and e-business are often used
interchangeably. For online retail selling, the term e-tailing is sometimes used.‟

Ecommerce, e-commerce, or electronic commerce is the conduct of a financial

transaction by electronic means. With the huge success of commerce on the
Internet, ecommerce usually refers to shopping at online stores on the World
Wide Web, also known as ecommerce Web sites. E-commerce can be business to
business (B to B) or business to consumer (B to C).

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 This definition of e-commerce, that is presented by Turban et al. (2006, p. 4), is
used as the foundational definition of e-commerce for this study. This definition
has been chosen for its comprehensiveness and clarity and its relevance to e-
commerce in the retail industry.

„E-commerce describes the process of buying, selling, transferring, or exchanging

products, service, and/or information via computer networks, including the
internet.‟

2.1.2 History of E-commerce

The term e-commerce was originally conceived to describe the process of

conducting business transactions electronically using technology from the
Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These
technologies, which first appeared in the late 1970‟s, allowed for the exchange of
information and the execution of electronic transactions between businesses,
typically in the form of electronic purchase orders and invoices. EDI and EFT
were the enabling technologies that laid the groundwork for what is now known
as e-commerce. The Boston Computer Exchange, a marketplace for used
computer equipment started in the year 1982, was one of the first known
examples of e-commerce. Throughout the 1980‟s, the proliferation of credit cards,
ATM machines and telephone banking was the next step in the evolution of
electronic commerce. Starting in the early 90‟s, e-commerce would also include
things such as Enterprise Resource Planning (ERP), Data Warehousing and Data
Mining.

In the year 1994 e-commerce really accelerated due to the introduction of security
protocols and high speed internet connections such as DSL, which allowed much
faster connection speeds and faster online transaction capability. In between the

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 year 1998 and 2000, a substantial number of businesses in Western Europe and
the United States built out their first rudimentary e-commerce websites. The
definition of e-commerce began to change in the year 2000 though, the year of the
dot-com collapse, when thousands of internet businesses folded. Despite the epic
collapse, many of the worlds‟ most established traditional brick-and-mortar
businesses were emboldened with the promise of e-commerce and the prospect of
serving a global customer base electronically. The very next year, business to
business transactions online became one of the largest forms of e-commerce with
over $700 billion dollars in sales1.

Many of the dot-com collapses “first-mover” failures served their offline

competitors very well, providing evidence of what not to do in building a viable
online business. For example, Webvan which was one of the more infamous dot-
com failures, trail blazed the path for Albertsons and Safeway, two of the largest
national supermarket chains, who each have developed their own successful
online grocery delivery businesses.

2.1.3 E-Commerce Pioneers

The birth of companies such as eBay and Amazon (launched in the year 1994)
really began to lead the way in e-commerce. Both eBay and Amazon were among
the first to establish prominent e-commerce brands. The most prominent e-
commerce categories today are computers, books, office supplies, music, and a
variety of electronics.

Amazon.com, Inc., founded by Jeff Bezos, was the original e-commerce pioneer
and certainly the most recognizable. In the beginning, Amazon‟s business model
required massive investment in warehousing, delivery and fulfillment capability
and took years for Amazon to gain profitability. But finally in the year 2003,

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almost 10 years after launching the company, Amazon.com realized its first
annual profit. Amazon began as just an online bookstore but over the years has
extended its offering to a wide variety of product categories, including
electronics, software, music, DVD‟s, CD‟s, video games, MP3‟s, clothing, shoes,
health and beauty products and even household goods. Bezos, was responsible
for naming the company “Amazon” after the world‟s largest river and it enjoys a
truly global presence with stand alone websites in six other countries, including
the United Kingdom, Canada, France, Germany, Japan and China. Amazon.com
was also the original pioneer in affiliate marketing, allowing other websites to
earn sales commissions for referring Amazon products to their customers. Today,
Amazon generates anywhere between 30 to 40 percent of its total sales revenue
from affiliates or third party merchants who list and sell their products on
Amazon‟s web site. Today, the Amazon moniker certainly applies as it is one of
the most recognized and most profitable e-commerce businesses on the planet. In
the year 1999, Jeff Bezos was honored with Time Magazine‟s “Person of the
Year” award, immortalizing him forever as probably the single most recognizable
figure in the entire e-commerce community.

Amazon and fellow e-commerce industry giant Dell remain two of the largest
internet retailers in the world, among other offline industry giants such as Staples,
Office Depot, and Hewlett Packard. Dell.com is another one of the most
recognizable e-commerce brands online. Dell.com‟s website was launched in the
year 1994 with a single static web page and their online presence quickly grew.
In year 1997, Dell announced a single-day sales record of a million dollars on its
website. In fact, roughly half of Dell‟s total profits come directly from their
website alone. With no offline retail outlets to speak of, Dell is another e-
commerce pioneer that many businesses have tried to model themselves after by
selling products almost exclusively online.

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2.1.4 Categories of E-commerce

E-commerce is usually classified by the types of entities participating in the

transactions or business processes. Generally, e-commerce activities can be
grouped into three categories: Business-to-Business (B2B), Business-to-Customer
(B2C), and Customer-to- Customer (C2C), as shown in Table 2.1

Table 2.1:- Categories of E-Commerce

C
CAAT
TEEG
GOOR
RIIE
ESS D
DEESSC
CRRIIPPT
TIIO
ONN E
EXXA
AMMPPL
LEE

e-commerce model in
which all of the Alibaba.com,
B2B participants are BtoBOnline.com,
businesses or IndiaMART.com
organizations

Futurebazaar.com,flipkart.com,
e-commerce model in
Amazon.com sell products to
B2C which businesses sell
customers through their
to individual shoppers
websites

e-commerce model in Olx.com,Quicker.com in

which consumers sell which consumers trade with
C2C
directly to other each other through an online
consumers marketplace

e-commerce model in
which consumers
C2B SpeakOut.com
present themselves as a
buyer group.

(Source: Developed for this research & http://wiki.media-culture.org.au/index.php/E-commerce-

Overview_-E-CommerceMajorCategories)

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1. B2B e-commerce:

Business-to-Business involves online transactions between businesses

(Thanasankit, 2003, p.152), all of the participants involved in B2B e-
commerce are either businesses or organizations (Turban et al. 2006, p. 8).
Schneider (2006) pointed out that in terms of volume and number of
transactions, B2B is much greater than B2C. Figure 2.1 shows a rough
approximation of the relative sizes of these elements in terms of the dollar
volume and the number of transactions. Obviously, B2B e-commerce plays a
very important role in e-commerce activities, and occupies a great percentage.

Figure 2.1:- Elements of Electronic Commerce

B2B

E-Commerce
B2C
E-Commerce

(Source: Schneider (2006, p. 6))

Business-to-Business (B2B) e-commerce is estimated to grow rapidly at a

CAGR of 59.1 per cent in India. India‟s largest B2B portal Tradeindia,
maintained by Infocom Network Ltd, also stated that e-commerce transactions
in India show a growth rate of 30 percent to 40 percent and will soon reach the
$100 billion mark2. Companies like Indiamart.com has also penetrated into
this segment and company has more than 5 million buyers3.

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2. B2C e-commerce:

B2C is another of the major components of e-commerce, and includes retail

transactions of products or services from businesses to individual customers,
and is also called „e-tailing‟ (Turban et al. 2006, p. 8).Business-to-Consumer
(B2C) e-commerce is also growing rapidly through year 2008, but it cannot
defeat B2B e-commerce, which remains a significantly larger channel. This
would be led by consumers' willingness to make online purchases, as the
Internet becomes a more respected and trusted medium. Future Group also
entered into B2C with their portal futurebazaar.com. Along with that
flipkart.com, Infibeam.com are also examples of B2C in India. According to
eMarketer, January 2008, B2C E-Commerce is expected to rise at US $ 5.6
billion in the year 2011 from $ 0.8 billion in the year 20064.

3. C2C e-commerce:

In C2C e-commerce, business originates from consumer and ultimate

destination is also consumer. This type of commerce is best suited for dealing
in goods for which there is no established market mechanism, for example
selling used books or clothes either on cash or on barter basis. The vast space
of internet allows person to globally search for potential buyer. This segment
of e-commerce is showing growth in India as portals like olx.com,
quicker.com have entered into market.

4. B2G e-commerce:

Business-to-government e-commerce or B2G is generally defined as

commerce between companies and the public sector. It refers to the use of the
Internet for public procurement, licensing procedures, and other government-
related operations.

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 5. B2B2C e-commerce:

Business-to-business-to-customers (B2B2C): In this case a business sells to a

business but deliver the product or service to an individual consumer.

6. Government-to-citizens (G2C) and to others:

In this case a government entity (unit) provides services to its citizens via EC
technologies. Government units can do business with other government units
as well as with businesses (G2B).

7. Mobile commerce (m-commerce):

When e-commerce is done in a wireless environment, such as using cell

phones to access the Internet and shop there, is known as m-commerce.

2.1.5 Components of E-Commerce Market

The Indian e-commerce portals provide goods and services in a variety of a

number of categories such as apparel and accessories, health and beauty, books
and magazines, computers and peripherals, consumer durables and so on. Online
users in India have shown willingness to make purchase over internet and that is
quite evident from growth of various components of e-commerce.

The e-commerce market is broadly divided into two major categories namely
online travel Industry and Online non travel industry which include e-tailing,
digital download, financial services and other online services such as online
matrimonial, online gaming subscription and so on. The online travel is the major
component of e-commerce with 76 percent contribution to e-commerce market,

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while the e-tailing and financial services have humble contribution of 8 percent
along with 2 percent contribution from digital download4.

Figure 2.2:- Contribution from Components of E-commerce Market

Other Online
Service
E-Tailing 6%
8%
Financial
Service
8%

Digital E-Commerce
Download
2%
Market

Online Travel
76%

(Source: Report of Online Commerce: March 2011, IAMAI)

Of the market size of INR 19,688 crores; online travel, which includes booking
rail and air tickets, hotel accommodations and tour packages comprised 76
percent of the whole pie. Online travel industry has grown from INR 6,250 crores
in the year 2007 to INR 14,953 in year 2009 and is expected to reach at INR
37,890 crores by the year 2011. Out of total INR 14,953 crores, online travel
market, domestic air travel contributes 63 percent which is INR 9,482 crores
followed by railway tickets contributing 28 percent (INR 4,184 crores) others
such as international air travel (INR 548 crores), hotel booking (INR 308 crores),
bus ticket (INR 294 crores), tour packages (INR 86 crores) & travel insurance
(INR 52 crores) contribute balance 9 percent of the total online travel market.

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E-tailing comprises of buying consumers items such as cameras, computers ,home
& kitchen appliances, flowers and toys, gifts online. This category has grown
from INR 978 crores in the year 2007 to INR 1550 crore in the year 2009. At
present, PCs, laptops, computer peripherals, accessories and storage, contribute
the most 36 percent (INR 560 crores) to e-tailing followed by cameras & mobiles
contributing 25 percent (INR 389 crores). Personal items such as jewellery,
apparels, cosmetics, apparels, shoes and watches contribute 19 percent (INR 296
crores) whereas Electronic items like TV, Audio systems & other accessories
account for 13 percent (INR 203 crores) Balance 7 percent is contributed by
Home & kitchen appliances (4 percent) and other online buying (toys, gifts,
flowers etc.)

Financial services market is estimated to be INR 1,540 crores and is expected to

grow to INR 2,680 crores in the year 2011. The online financial services include
insurance and related services (INR 585 crores), online transaction for financial
services (INR 527 crores) and other fund-based transactions (INR 426 crores)
such as paying utility bills.

Digital downloads as a category has increases from INR 238 crores in the year
2007 to INR 435 crores in the year 2009 and is expected to reach at INR 1100
crore by the year 2011.Major contribution came from mobile downloads is
attributed to ringtone, wallpaper or picture download (INR 148 crore) and mobile
recharge as well as bill payment (INR 148 crores). Software and utility
applications for mobile account for 18 percent of digital download (INR 78
crores), paid music/video downloads contribute 7 percent (INR 30 crores) while
balance 6 percent is contributed by mobile games downloads.

Along with above mention components, other online services category has shown
increase from INR 680 crores in the year 2007 to INR 1,210 crores in the year

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 2009 and expected to reach at INR 2150 crores by the year 2011. In this category
maximum contribution came from online job (INR 484 crores) followed by
movie/cinema hall ticket (INR 424 crores), Online matrimonial (INR182 crores),
other B2C classifieds (cars, real estate) contributes INR 109 crores and online
food delivery (INR 7 crores).

2.1.6 Benefits of E-commerce

The benefits of e-commerce have been discussed by a number of researchers.

David E. Colby, in 2004(E-Business Technologies) and Turban et al. (2004)
categorized the benefits of e-commerce based on the party which receives the
benefit, such as the organization, the customer, or society. Table 2.2 summaries
the benefits of ecommerce based on David E. Colby (2004) & Turban et al.
(2006).

E-commerce also help organizations reach both national and international

markets; there is no geographic boundary for e-commerce (David E. Colby,
Wang, Head & Archer 2002). The Internet spans the world, and it is possible to
do business with any business or person who is connected to the Internet. Simple
local businesses are able to market and sell their offerings internationally using e-
commerce. This global opportunity is assisted by the fact that, unlike traditional
communications methods, users are not charged according to the distance over
which they are communicating. Consequently, increased revenue from new
customers and new markets can be expected.

In addition to sales opportunities for the sellers, e-commerce can also increase
purchasing opportunities for the buyers, and thus make the supply chain more
efficient and effective (Agrawal et al. 2001).

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Table2.2:- Benefits of E-Commerce

B
BEEN
NEEFFIIT
T E
EXXA
AMMPPL
LEE

Increased Sales Opportunity,

Decrease transaction Cost,
Ability to operate 24*7,
Organization Ability to maintain customer relationship with
direct interaction,
Enhancing Brand Image,
Reduction of Marketing and Advertising Costs

Wider Product Availability,

Ability to shop 24*7,
Easy Comparison Shopping,
Customer Ability to create one-on-one relationship with
seller,
Time Saving,
Cheap Products and So On.

Society Improved quality of living

(Source: Adopted from Weibing Xuan &E-Business Technologies)

Through the huge amount of information available on the internet, organizations

can easily compare and identify new business partners and suppliers and achieve
cheaper prices, better efficiency, shorter ordering time cycles, cost reductions and
uninterrupted business availability (Chaffey 2003; Turban et al. 2004). Schneider
(2006) pointed out that such benefits will create competitive advantages for
organizations.

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2.1.7 Limitations of E-commerce

Even though e-commerce provides numerous benefits to customers, organizations

and society, there are some costs and limitations associated with e-commerce.
David E. Colby (E-Business Technologies), in the year 2004 categorized the
disadvantages of e-commerce based on the party which receives the
disadvantages, such as the organization, the customer.

Table2.3:- Limitations of E-Commerce

L
LIIM
MIIT
TAAT
TIIO
ONN E
EXXA
AMMPPL
LEE

Rapidly changing technology,

Insufficient telecommunication capacity in
some areas,
Problems maintaining security and
Organization
reliability,
Global market issue of language,
Currency and policies,
Increase instances of fraud

Concern with Transaction security &

privacy,
Buyer Lack of trust for unfamiliar sites,
Inability to touch and feel the product
before purchase

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2.1.7.1 Technical Limitations

Further Technical Limitations are classified as:

1. Costs of a technological solution

2. Protocols are not standardized around the world
3. Insufficient telecommunications bandwidth
4. Software tools are not fixed but constantly evolving
5. Access limitations of dial-up, cable, ISDN, wireless
6. Difficulty in integrating e-Commerce infrastructure with current
organizational IT system.

2.1.7.2 Non Technical Limitations

1. Customer fear of personal information being used wrongly.

2. Security and privacy
3. Cultural and legal obstacles
4. People's resistance to change
5. People not used to faceless / paperless / non-physical transactions
6. Returning goods
7. Perishable goods

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2.2 Internet Development in India and E-Commerce

2.2.1 Definition of Internet

Internet is a means of connecting a computer to any other computer anywhere in

the world via dedicated routers and servers. When two computers are connected
over the Internet, they can send and receive all kinds of information such as text,
graphics, voice, video, and computer programs.

Internet is emerging at a rapid pace and it‟s already been a part in the field of
business, economy, entertainment, social group all over the globe .The rise of
Internet usage all over the world unlocked various new businesses, products,
services. Internet is constantly changing the way consumers shop and business
sells their product. People use internet for various purpose such as education,
communication, to share information, entertainment, financial transactions,
shopping, for business and so on. Popular online activities includes emailing,
search or buy non travel product, download music, social networking, search or
buy travel products, instant messaging or chatting, PC to mobile SMS and pay
bills online. Most used websites are Yahoo and Google, Gmail for e-mailing and
instant message purpose, Naukri for job search, IRCTC for online travel,99acre
for real estate, Sharekhan for online share trading, Way2sms for PC to mobile
SMS and ICICI bank for net baking purpose5.

The number of people online around the world will grow more than 45 percent to
2.2 billion users by the year 2013 and Asia will continue to be the biggest Internet
growth engine6. 'Global Online Population Forecast, 2008 to 2013', the report
noted that emerging markets like India would see a growth of 10 to 20 per cent by
the year 2013.

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2.2.2 Internet Usage and Population Statistics

As shown in Figure 2.3, the number of internet users in India has grown markedly
since year 2001. Form modest figure of 7 million it has raised to 100 million over
a decade time. Graph also shows significant raise during last half of the decade
which serves as one of the facilitating factor for e-commerce.

Figure 2.3:- Internet usage statistics in India (Year 2001 to 2011)

Internet Users in India 2001-2011 ( in Million)

120

100
100

80
Internet Users

81 81

60

51
40
39 40 42

20
23
17
0 7
2001 2002 2003 2004 2005 2006 2007 2009 2010 2011
Years

(Source: http://www.internetworldstats.com/asia/in.htm)

According to the Internet Usage Statistics of India – A 2010 report, there are 88
million active internet users in India out of the population of 1,173,108,018. India
has 10.52 million broadband users till October 2010, constituting 6 percent of
population. According to Akamai report 2009 India has an average internet
connection speed of just 772 Kbps compared with the global average of 1.5 Mbps.

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The number of broadband subscribers surged from 9.47 million at the end of June
to 10.30 million in third Quarter of the year 20107. As India‟s mid-age population
turns more affluent, the demand for broadband services has also surged. The share
of Broadband subscription in total internet subscription stood at 57.6 percent at
the end of September 20108.

The speed delivered by broadband connection is greater than or equal to 256 Kbps
while that of narrowband is less than 256 Kbps. This indicates that people give
more preference to the speed of access compared to the price charged for the
same.

Figure 2.4:- Trends in Internet/Broadband Subscription

Trends in Internet/Broadband Subscription

20
18
16
Subscriber Base(In Million)

14 7.59
7.25
12 7.41
7.42
7.42
10 Narrowband
8 Broadband

6
9.47 10.31
4 7.82 8.77
7.21
2
0
Sep-09 Dec-09 Mar-10 Jun-10 Sep-10

Quarter Ending

(Source: http://trak.in/tags/business/2011/01/14/indian-telecom-services-report/)

133
Average weekly internet usage time has shown a similar increase to that of the
numbers of internet and broadband users. As Figure 2.4 shows, the average
weekly internet usage time has increased from 5.6 hours in July 2001 to 9.3 hours
in the year 2008 and 15.7 hours in the year 2009. That means there is a rise of 70
percent from the year 2008 to year 2009. Internet is percolating into daily lives of
people. Downloading music, videos and socializing through internet have become
popular among young generation.

Figure 2.5:- Internet usage statistics in India (Year 2001 to 2009)

Average Hour/week

15.7

9.3 Average Hour/week

8.2
6.9
6.2
5.6
4.8

2001 2003 2004 2006 2007 2008 2009

(Source: http://trak.in/tags/business/2010/04/07/internet-usage-india-report-2010/)

A large portion of users access internet from office and cyber cafe. Cyber cafes
continue to dominate the share (37 percent) among various sources. However
accessing internet through homes has steadily decline over the years. This
indicates that although accessing through the number of cyber cafes has shrunk in
Metros, users in small towns still access internet through Public Avenue.

134
Another reason of decline in accessing from home can be that though middle class
people have started using internet but still can‟t afford the charges of internet and
prefer to access from cybercafé. As more and more businesses adopt internet as
their key infrastructure, accessing Internet through offices continue to rise.

Figure 2.6:-Access Point wise Internet Usage in India

100% 2% 2% 2% 2% 1%
3% 4%
8% 3% 5%
4% 6% 7% 8% 4%
90% 6%

20%
19% 20%
80% 22%
25%
27% 30%
30%
70%

23%
60% 30% 27%

31%
50% 30% 26%
22% 23%

40%

30% others
52% School/colleges
44% 46%
20% 43% 39% Office
36% 37% 37%
Home
10%
Cyber café

0%
2000 2001 2003 2004 2006 2007 2008 2009

(Source: http://trak.in/tags/business/2010/04/07/internet-usage-india-report-2010/)

135
Further 4 percent of users accessing Internet through alternative source such as
mobile. Mobile is emerging as the potential point of access for low PC and high
mobile penetrated Indian market, although the present usage is restricted to 4
percent of total Active Internet user base. The Wi-Fi hot spots as a point of access
have been utilized by the 0.2 percent of Active Internet users. All in all
approximately 4 percent of the 36 Million Active Internet Users are accessing
their mobile phones for Internet access at least once a month.

The statistics (conducted by IMRB) show that 85 percent of internet users are
between 18 to 35 years. So the usage is driven by youth of India which is a
positive sign for the growth of e-commerce.

Figure 2.7:- Age-wise Internet Usage in India

User Profile - Age

2%
6% 7%

29% Below 18
18-25
56% 26-35
36-45
45-55

(Source: IMRB Report, Internet Usage and habits of Cyber Café User 2010)

136
As shown in Figure 2.7, almost half of the Internet users are online at least 4 -6
times /week. Internet plays an integral role in daily life. Ranging from
communication to shopping, a huge amount of activities is just a click away. This
has lead to increased frequency of Internet usage among internet users. There is a
gradual but substantial increase in the number of internet users who use internet
daily.

Figure 2.8:- Frequency of Internet Usage in India

3% 3% 4% 3% 4% 3% 2% 2%
7% 11% 11%
11% 10% 12%
13%
16%

19% 15%
18%
21% 23% 15% 18%

21%

24% < once a month

26% 22% 23%
23% 2-3 times/month
25% 21%
2-3 times/week
24% 4-6 times/week

19% Once a week

18%
19% 20% Daily
23% 18%
14%
15%

28% 28%
23% 23% 25% 24%
21%
17%

2000 2001 2003 2004 2006 2007 2008 2009

(Source: http://trak.in/tags/business/2010/04/07/internet-usage-india-report-2010/)

137
Activities performed on internet has seen gradual shift across demographic
segments. Email service has gone down in all the segments.

As working professional access internet mainly through office, they tend to utilize
internet for communication and searching various types of information. To a
limited extent, they also indulge in E-commerce services. School and college
students use internet for searching information and for entertainment purpose.
Online advertising can play a major role in increasing potential of e-commerce by
attracting more people via sending personalize e-mails to younger target market.

Figure 2.9:- Preference of Online Activities across Demographic Segments

3% 5% 5%
2% 7% 9% 8%
7%
11% 9%
11% 10%
20%
12% 4%
8% 3% 10%

16% 25%
26%
21%
37% Others
8%
45% 3%
E-commerce
5% 8%
Entertainment

9% Information

10% 52% 52% Chat

46% 43%
E-mail
30%
20%

School College Young Older Working Non

Going Going Men Men Women working
Kids women

(Source: http://trak.in/tags/business/2010/04/07/internet-usage-india-report-2010/)

138
2.2.3 Mobile Internet Usage

Mobile Internet is the system of interconnected network which is accessed

through mobile devices such as a cell phone or other portable gadgets or browsing
a mobile network such as Wi-Fi. This access does not require a desktop computer
or a fixed landline connection. It can also be referred to as Internet access „on the
move‟.

Wireless infrastructures have emerged as an effective option of connecting to an

ever-evolving expansive information network such as the Internet. Such
infrastructures, due to their inherent advantages, promise a renewed future in
terms of offering improved and exciting services to the existing users. As a result,
stakeholders are willing to encourage the success of such infrastructures
supporting “Internet on the move”.

Figure 2.10:- Wireless Subscriber Base (Year 2009-2010)

Wireless Scriber Base

700
584 601
600
525.09
500 471.73
391.76 427.29
400 Subscriber
346.89 Base ( in
300 million )
200
100
0
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar '10 Apr '10

(Source: www.trai.gov.in/WriteReadData/trai/.../IndicatorReport6apr10.pdf)

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Total Wireless (GSM + CDMA) subscriber base increased from 471.73 Million at
the end of September 2009 to 525.09 Million at the end of December 2009,
thereby showing a growth of 11.3 percent. During this quarter 53.37 million
subscribers were added.

A study by IMRB and IAMAI suggests that there are only about 2 million users
accessing Internet through their mobile phones and other mobile devices on an
active basis, which means they use Internet on their Mobile at least once a month.
As per the study, 27 percent mobile phones are Internet ready (127 million mobile
subscribers out of 471 million total subscribers) and out of these 127 million
subscribers, only 12 million have used Mobile Internet. And this number further
reduces down to 2 million or 17 percent when it comes to active users.

Figure 2.11:- Activities Performed on Internet through Mobile Phone

Activities performed on Internet through Mobile Phone

8%

23% Communication
Entertainment
60%, E-commerce
7% Information Search
Online Service
2%

(Source: http://www.pluggd.in/mobile-internet-statistics-for-india-297/)

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Communication (Checking emails) and searching for information are the two
most popular reasons for accessing net over mobile phones. With the introduction
of M-commerce, advance booking of movie tickets using mobile phones and
mobile adaptations of the social networking sites like Facebook and Orkut, there
is substantial increase in users.

It has been observed, Internet access over mobile phones is still in its infancy in
India, 96 percent of Urban Indian mobile users are not accessing net, a huge
untapped growth potential. While those who do access the net (over their phones)
do so with the intention of staying in touch with people.

2.2.3.1 Problems in mobile internet growth

India‟s internet usage is concentrated in the urban and metropolitan areas,

while the rural neighborhoods are more or less oblivious to the existence of
mobile internet. If mobile internet usage in India has to increase, having
only the developed areas increase usage will not help mobile internet
growth in the country.

So from the above statistics, it can be concluded that the internet and
telecommunications have undergone rapid development in India over the
last decade and presenting a huge opportunity for e-commerce players.

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2.3 Growth and Development of E-Commerce in India

2.3.1 Growth of E-Commerce in India

Today E-commerce is a byword in Indian society and it has become an integrated
part of our daily life. Analysts such as CII and NASSCOM were optimistic on
Indian ecommerce since year 2000-2001 and predicted tremendous e-commerce
growth and India is showing tremendous growth in the e-commerce. Although as
compared to the western countries, India is still in its initial stage of development.

Table 2.4:- Growth of E-commerce in India

E
E--C
COOM
MMME
ERRC
CEEM
MAAR
RKKE
ETT SSIIZ
ZEE FFR
ROOM
MYYE
EAAR
R 22000077 T
TOO 22001111
((FFiigg.. IInn ccrroorreess.. PPeerrcceennttaaggee iinnddiiccaattee sshhaarree ooff tthhee oovveerraalll m
maarrkkeett ssiizzee))

Dec- Dec- Dec- Dec- Dec-

Year
2007 2008 2009 2010+ 2011+

Total Market Size 8,146 14,030 19,688 31,598 46,520

Online Travel Industry 6,250 10500 14,953 25,258 37,890

Online Travel Industry ( in

77 75 76 80 81
Percentage)

Online Non-Travel Industry 1896 3530 4735 6340 8630

Online Non-Travel Industry

23 25 24 20 19
( in Percentage)

1. e-retailing 978 1120 1550 2050 2700

2. Digital downloads or Paid

238 290 435 680 1100
Content Subscription

3. Financial Services 1200 1540 2000 2680

4. Other Online Services 680 920 1210 1610 2150

(Source: Report of Online Commerce: March 2011, IAMAI) (+ are estimated Figures)

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Table 2.4 represents growth of E-Commerce in India from the year 2007.
E-commerce industry has grown from INR 8146 crores in the year 2007 to INR
19688 crore in the year 2009.This growth is primarily driven by online travel
industry which contributes 76 percent to total e-commerce industry in India today.
This strong growth is expected to continue due to the support of service providers
and is expected to reach INR 46,520 crores by the year 2011.

Research studies have indicated several factors responsible for the sudden spurt in
growth of E-Commerce in India such as:

 Rapidly increasing Internet user base

 Technology advancements such as VOIP (Voice-over-IP) have bridged the
gap between buyers and sellers online.
 The emergence of blogs as an avenue for information dissemination and
two-way communication for online retailers and e-commerce vendors.
 Improved fraud prevention technologies that offer a safe and secure
business environment and help prevent credit card frauds, identity thefts
and phishing/.
 Longer reach - Consumers in the Tier II & Tier III cities are fast realizing
the potential of the Internet as a transacting medium
 The young population find online transactions much easier

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2.3.2 Penetration of E-commerce in India

In India, internet has primarily been used for enabling communication between
individuals through various modes such as emailing, messaging or social
networking. Along with that internet has been used to collect information. Still in
India, initiatives over the internet have not been able to make users buy products.

Figure 2.12 represents a study conducted by I-Cube in the year 2009 (survey
conducted in top 15 cities in the country). As per the study there are 17.5 Mn
Active Internet Users, who access Internet at least once in a month; out of which
13.6 Mn users who look for information regarding products. Of these, there are
merely 7.4 Mn (40 percent) have bought any product over the Internet.

Figure 2.12:- E-Commerce Penetration among Active Internet Users

Active Internet Users

17.5
Look for Information
13.6 Shop Online
Million
Million Who have
7.4 bought any
Those who product/Servi
have used Accessing Million ce on the
internet at least Internet to look internet
once in the last for information
month. of any product

(Source: Report of Online Commerce: March 2011, IAMAI)

144
Though e-commerce is expected to reach Rs. 46,520 crore by the year 2011,
barring few services such as online ticketing, Indian consumers are not shopping
online. Large number of internet users use internet to look for information about
the product or service they want to buy and purchase from physical format.

Figure 2.13:- Retail Segment wise information search form Internet in

Percentage (Only Look For Information)

Financial Services 3
10
Home & Kitchen Appliances 3
16
Automotive 4
22
Mobile Downloads 31
Electronics Itms 5
32
Personal Items 11
41
Other Online Services 18
45
Computers 10
49
Camera ,Mobile &MP3 Player 17
60
Online Travel 42
61
0% 10% 20% 30% 40% 50% 60% 70%

Bought Offline LFI

(Source: Report of Online Commerce: March 2011, IAMAI)

Further remaining 6.13 million Active internet users are those users who access
Internet to look for information on product or services, however, didn‟t purchase
it over internet. Out of them 61 percent access internet to look for information on
Online Travel (such as tickets and hotel bookings); of these 42 percent end up
buying travel services through offline route.

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Cameras and mobile is the second most looked for information category. 60
percent of Only Look For Information accessed Internet to look for information
on cameras and mobiles while 17 percent of them bought the product through
conventional shops.

Among Online Shoppers, 89 percent accessed internet to look for information on

online travel services and 80 percent actually purchased product or services
belonging to online travel using internet. Cameras and Mobiles were looked for
information by 62 percent of online shoppers, however only 12 percent actually
bought it over Internet. This indicates that even online shoppers access internet to
know more about products like Cameras and mobiles but only handful of them
actually use internet to purchase the same. Mobile downloads and personal items
were purchased by 22 percent and 20 percent of online shoppers respectively.

This indicates that e-commerce players were able to generate traffic on the
website but couldn‟t convert visitors into customers. Majority of respondents have
revealed reasons related to lack of purchase were „lack of trust‟ (99 percent) and
„fulfillment issue‟ (77 percent) followed by „shopping experience‟ (69 percent),
physical orientation of the product (63 percent) and „no need of online shopping‟.

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2.3.3 Reason for not Purchasing Online

As shown in Figure 2.14 IAMAI has identified several reasons that are
responsible for non-purchase of goods online.

Figure 2.14:- Reasons Given by Respondents for Not Purchasing Online

No need for shopping online 47%

Want to see product before buying 63%

Shopping Experience 69%

Fulfillment Issue 77%

Lack of Trust 99%

(Source: Report of Online Commerce: March 2011, IAMAI)

As per the Figure 2.14, lack of trust is a major reason for not purchasing online,
followed by fulfillment issues.

1. Lack of Trust

Most of Non-shoppers do not shop online due to lack of trust in Internet for
doing transactions. This includes reasons such as worried about personal
security, distrust with Internet for shopping online, distrust with quality. In

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 other words, this lack of trust primarily leads to security concerns one has
while transacting over Internet.

2. Security Concerns

Most Net commerce shopping happens through credit or debit cards.

Indians however are still concerned about their personal security. They still
prefer to transact in person than depend on Internet.

3. Uncertainty About Product And Service Quality

Unlike conventional shopping, buyers worry about online shopping. They

aren‟t sure if they will get good quality products online.

4. Fulfillment Issues

When person is transacting over Internet, they are not sure who is sitting
across the table. They are worried about delivery of goods. It includes
issues such as delay in or non delivery of goods.

5. Non Delivery Of Goods

Apart from shopping experience and convenience, one of the major factors
for net commerce not taking off in India as expected is due to the on-time
dispatch of goods. Delivery delays invariably have left people wondering if
their money was „lost‟ in the transaction and are averse to conducting
future online transactions. Merchants start order processing and shipping
only after the receipt of money through Credit Card or online banking
payment.

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 6. Shopping Experience

Buying a product or service is many times associated with shopping

experience. It includes Shopping experience includes fun, entertainment
and the satisfaction derived from shopping of product or service. While
transacting online, most users lack this experience and it has resulted in
people refraining from shopping online.

7. Lack of touch & feel

Touch & feel of product being purchased lacks while shopping online.
Online shopping is best suitable for products and services that do not
require touch & feel experience by buyer. Probably that‟s one of the
reasons for books & ticketing being more successful than apparels while
shopping online.

2.3.4 Major Barriers to E-Commerce Development in India

As an application of the internet, e-commerce is a booming new business model

in India, as an adjunct to the growth of internet usage. India is one of the most
attractive ecommerce markets in the world in terms of market size, internet user
numbers, and potential B2C users; but in reality, India‟s e-commerce is lagging
far behind other countries in terms of market size and scope. Many studies have
been undertaken to investigate the reasons for this discrepancy in internet and e-
commerce uptake in China, and Table 2.5 summarizes the barriers to e-commerce
identified in previous studies, and some important barriers are analyzed in more
detail.

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Table 2.5:- Barriers to Development of E-Commerce in India

B
BAAR
RRRIIE
ERR L
LIIT
TEER
RAAT
TUUR
REE

Mr. Rajiv Rastogi ( Director Dept.of Information

Technology, India)
1. Limited Internet access
Mr.Pankaj Narayan Pandit ( Head,Airlines Vertical 23rd
February 2010 )

Mr. Rajiv Rastogi (Director Dept.of Information

2. Slow Internet Connectivity
Technology, India)

Mr. Rajiv Rastogi (Director Dept.of Information

3. Access costs are high
Technology, India)

Mr. Rajiv Rastogi (Director Dept.of Information

4. Connections are unreliable
Technology, India)

IRCTC, April 2009, Nilesh Kamdar 2009(Service

Account Manager, Tally Solutions) Anurag Shah 2009
5. Not sure of product quality
(CEO, Technology Services, Omnitech InfoSolutions
Ltd)

IRCTC, April 2009, Glenn Joseph Francis (A.V.P.,

6. Not sure of security of
Anthem Consulting Pvt Ltd) , Anurag Shah 2009 (CEO,
transactions Technology Services, Omnitech InfoSolutions Ltd)

IRCTC, April 2009, Anurag Shah 2009 (CEO,

7. Have to wait for delivery
Technology Services, Omnitech InfoSolutions Ltd)

IRCTC, April 2009, Purnachandra Rao Gudipati

8. Lack of Proper Cyber Laws
Consultant, Capgemini

9. Lack of Information of
Sudeep Tarafdar Senior Consultant, IBM
Product
10. Lack of payment Channel Radhakrishna Marar Business Analyst, Oracle

11. The absence of IRCTC, April 2009 , Anurag Shah 2009 (CEO,

bargaining/negotiation power Technology Services, Omnitech InfoSolutions Ltd)

(Source: Developed for this Research)

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Some of the other barriers studied by Foreign Researchers are mentioned in

B
BAAR
RRRIIE
ERR L
LIIT
TEER
RAAT
TUUR
REE

12. Education in e-
Zhang et al. (2005)
commerce
Stylianou et al. (2003); UNCTAD (2003);
13. Culture
Efendioglu et al (2004); Tan and Ouyang (2004)

14. Advanced retail

Dedrik et al. (2001); Wong et al. (2004)
networks
(Source: Developed for this Research)

1. Speed and cost of internet access

The low speed and high cost of online access were major barriers to access e-
retailing in India. The average internet speed in the world was 1.5 mbps while
the average speed of internet in India is only 772 kbps. In high broadband
connectivity India ranks 80th with 0.4 percent connections measured to have a
speed excess of 5 mbps9. In India the average rate of broadband connection is
very expensive compared to China, Japan, Western Europe and USA. The
signals are also fluctuating which is again a negative factor for online
shopping. Also broadband growth remains subdued in India. As per TRAI
report, in the month of January, 2011 total of 0.29 million broadband
subscribers were added taking total to 11.21 million, which is showing growth
rate of 2.70 percent5.

2. Limited Internet Access

Many technologies and service plans for Internet access allow customers to
connect to the Internet. In 20th century, dial-up connection was the means for
Indian consumer to access internet. But in 21st century broadband became
popular as a means of Internet access. So India has limited Internet access
compared to world. Though it has shown signs of improvement as in 2011, the

151
 internet access increase as common methods of access are Dial-up, ADSL,
Internet over cable television lines, Wi-Fi hotspots, wireless internet service
provider, mobile broadband and internet satellite.

3. Not Sure About Product Quality

Product Quality is the most important concern when consumer purchase
online due to the nature of the virtual environment, consumers has difficulty
identifying the product quality. A number of times there is a clash between the
descriptions of product and consumer understanding. A number of times e-
commerce sites will not display the image of the product, which will make
difficult for consumer to purchase online as he is uncertain about the looks.

Figure 2.15:- Condition Presented by Online Retailer

152
 As shown in the Figure 2.3, the online retailer has placed a condition which
shows that “Actual product may differ from the image shown.” These types of
conditions will create doubt into the mind of the customer related to quality of
the product and consumer will hesitate to purchase. So product quality also
works as a major concern in Indian online retail. Retailers must improve their
operations and develop the trust related delivering better product quality.

4. Security of Online Transaction

Companies require protection for their system from hackers in addition to
enhanced commercial credibility; customers often worry about theft of their
personal information, such as a credit card number. Futurebazaar.com was
hacked by hackers and was down for two days. So e-commerce players must
develop proper technological and legal tools to enhance the security of e-
commerce websites.

5. Education
Education is another barrier towards the success of e-commerce. Though the
awareness of e-commerce is increasing in India as even at a graduate level the
introduction of e-commerce is provided. So the limitation related to education
can be easily eliminated in near future.

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2.4 Introduction to E-tailing

2.4.1 Definition of E-tailing

E-tailing which is also known as etailing is the selling of retail goods on the
internet. E-retailing is a common and widespread class of applications used by
retailers to sell products and services to users on the web. E-retailing is
synonymous with business to consumer (B2C) transaction.

A classic definition is used as the conceptual framework for e-tailing provided by

Turban et al. (2006, p.83) is as followed:

“Retailing conducted online, over the internet”

Definitions given by other researchers are as followed:

According to Kritisundar Paul and Anand “E-retailing uses internet as a medium

for customers to shop for the goods or services.”, while Tobias Gunnesson and
Klas Soderlund defined as "E-retailing is a sub-genre of B2C where the core offer
is a product and not a service and where the core product is a physical good. This
definition excludes services and information goods but includes physical goods
bundled with accompanying services, for example warranty.

Many researchers have provided similar definitions and have noted that the
concept of e-retailing is same as that of B2C e-commerce. Wang (2002,) provided
a broad definition of e-retailing which state that “The selling of goods and
services to the customer market via the internet”.

154
Along with selling Retailers also include other applications online like physical
retail outlet which include:

1. Selling goods and testing new products

Retailers use internet as a tool to test new products or services. This strategy
will reduce the risk in the early stages of new product sales. Retail giant Wal-
Mart also has adopted this strategy to sell some products online which were
not stocked in its store.

2. Market Research
Retailers can also use their online presence as a tool to collect valuable
information from customers to forecast future demand. In the offline
environment, such data are difficult to collect and analyze. Today almost all
the online players have developed call centre and share your feedback facility
with the help of which they can exactly analyze the problems faced by
customers during shopping and make it improve.

3. Promotional Tool
A Website can also be used as a tool to conduct promotional experiments due
to the wide reach of internet and the low cost.

4. Marketing tool
A website is an effective channel to communicate with customers. Two way
communications is possible on internet. Organizations do not need to rely
solely on one way communication media such as TV and newspaper. As a
new communication channel, internet can provide benefits to retailers like low
costs, personalization and continuous communication. By developing better
understanding with customers through customer relationship management,
marketers can also introduce relationship marketing technique in the retail
market to provide personalized service.

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2.4.2 Types of E-Retailing

E-retailers are classified into two categories which are:

1. Pure-play e-retailers:
They sell directly to consumer over the internet without maintaining a
physical sales channel. All of their business transactions and processes are
completed online. This type of online retailers usually forms the strategic
partnership with other companies in order to provide better customer service.
The example of pure-play e-retailer is eBay.

2. Click and mortar retailers:

Their business uses both the online as well as offline channel for selling
products. These players have some advantage over pure play retailers such as
established brand image, existing complete distribution channel, established
brand awareness and customer loyalty.

2.4.3 Models of E-Retailing

There are several models for e-retailing and these include

1. Specialized e-store

Specialized e-stores can be bifurcated by two ways which are specialization

by product line and specialization by function. When company has
specialization by product line, a store decides to pick up one particular
product liner e.g. Books, cloths and sells only that particular product line.
Online portals like taggle.com, a specialized e-store focusing on selling
electronic products or playgroundonline.com, a specialized e-store focusing
on selling sport related goods.

In contrast to that, a new kind of specialization is emerging on the internet is

specialization by function. An example of this is lastminute.com.
Lastminute.com sells gifts, travel tickets and other items for the last minute
156
 shoppers who want to purchase these items at a very short notice. Normally
when one purchases an item at a very short notice (e.g. travel), he often pays
premium which is an extra amount for the convenience of booking the travel
at the last minute. At the same time, there will be some sellers, e.g. airlines
companies; they have empty seats at the last minute which they are unable to
fill. So lastminute.com bring together travelers who want to book at last
minute and airlines which has got spare capacity at the last minute and allow
the former to buy from the latter at the last minute. So purchaser may get his
airline ticket at a reduced price. It is a win-win situation and unique kind of
specialization.

2. Generalized e-stores

This category of e-retailing model sells a large number of product lines rather
than con-fining themselves to just one or a very few product lines. Normally
Infibeam, FutureBazaar are generalized e-stores.

3. E-mall

In an e-mall, cyberspace is rented out to cyber e-store that wishes to sell their
goods. This store could be a specialized or generalized e-store. So a number
of product lines can be present in a single e-mall. In an e-mall, each store is
under its own management. E-mall management is responsible only for
creating cyber space that can be rented and can support service and marketing
of that mall. Thus it provides a web hosting service.

4. Direct selling by the manufacturer

A number of manufacturers with well known brand name products have

chosen to use the internet to carry out direct selling via the internet. One of the
best known brands is Dell computers. This approach permits mass
customization to meet customer preferences. This direct selling by
157
 manufacturer has an important disintermediation effect leading to reduce cost
to the end of customer and increased profitability to the manufacturer. This
approach can be used by manufacturers of well known brands of products
because customers are already aware about it. Also manufacturer must have
thorough understanding of customer preference; otherwise he has to rely on
customer knowledge of retailer. In this method manufacturer has to remain
cautious at a time of setting price as there are maximum chances of different
priced charged in online and offline format may lead to dissatisfaction from
customer side. To avoid this conflict, retailer should charge same price in
online format too but should provide more service or additional features with
the product.

5. Brokers or Intermediaries

This class of e-retailers is essentially an extension of the notion of a broker

from the physical to cyber world. A broker is an intermediary who

a. may take an order from a customer and pass it on to a supplier.

b. may put a customer with specific requirement in touch with supplier who
can meet those requirements.
c. may provide service to a customer, such as a comparison between goods,
with respect to particular criteria such as price, quality etc.

Thus broker provide comparison shopping, order taking and fulfillment and
services to a customer.

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2.4.4 How e-retailing website will work?

1. The customer visits the site and will select the item to be purchased.
2. He will confirm/finalize the item list selected and checkout.
3. He will enter credit card/ debit card information to make the payment.

Figure 2.16:-Graphical Representation of Functions of E-Retailing Website.

1. Shop

2. Checkout

3. Payment Information 6

4. Payment Gateway

5. Acquire

159
 4. The payment information entered by the user is getting checked with banker
via payment gateway and authenticated.
5. The payment will be credited to retailer account and an order confirmation is
shown to the visitor along with order detail and shipping information.
6. The customer will get the confirmation of payment. Customer will be able to
track their order status and an SMS /email update will be sent to the customer
on the product or service delivery.

2.4.5 Various Payment Modes in E-retailing

1. Internet Banking
Internet banking refers to carrying out banking functions through internet.
Core banking is a business between banking organization and small or retail
customers. In core banking, the bank branches are networked to offer the
services to their customers. These services are depositing and loan money.
After the roll out of core banking in India, majority of banks are providing net
banking facility free of cost. Internet banking is one of the popular methods of
paying online. In this method the customer need to select the net banking
option and pay to the seller‟s account through net banking account. For online
purchasers, the main concern is of security of the bank account. There are
certain factors that one must follow for secure internet banking.

1. The bank website should have encryption software.

2. One should avoid sending sensitive information like password or PIN by
e-mail or SMS to anybody.
3. One should alter his/her password occasionally.

160
2. Debit Cards and Credit Card

A Credit Card is a small plastic electronic card made according to ISO 7810
standard specification which is used for settling the payments. Debit Card is a
small plastic electronic card looking very similar to credit cards. The
important difference is that debit cards use savings account balance for
payments. These cards work almost similar to physical way where customer
swipe card at payment counter. In online purchase instead of swiping,
customer has to enter the card number and security code. For additional
security purpose, RBI has asked all the banks to use verified Visa and Master
Card Secure Code to authenticate buyers. So the buyer will be asked to verify
identity with these additional layers of security methods.

There are around 190 lakh credit and 1,900 lakh debit cards in India, but
there are just 11 transactions per credit card and one transaction per debit
card annually10. One of the major issue that need to focus is Debit card fees
refer to the fees which is charged when one makes purchases with his debit
card. Every financial institution charges processing fees made with the help
of a debit card. This charge is called debit card fees. When one uses a debit
card for making purchases, he is asked if he would like his transaction to be
treated as credit or a debit transaction. One is required to know why the
merchant asks this. The kind of transaction one selects determines the debit
card fees. Using the debit card and opting for a debit transaction makes it an
online transaction and opting for a credit type of transaction makes it an
offline transaction.

When an offline transaction is opted for, the debit card fees imposed is 2
percent of the total purchases made. This debit card fees may vary from bank
to bank issuing the debit card. This debit card fees will be borne by the
retailer. Adding up 2 percent debit card fees each time amounts to a hefty
sum for the retailer. This debit card fees is taken by the bank which issues the

161
 debit card to the card holder. In case of online debit transaction the debit card
fees imposed is very meager. The retailers and the merchants usually prefer
online debit transaction as they have to pay very little debit card fees. The
above mention reason also hinders the growth of credit card and debit card in
India.

3. Online Fund Transfer

Online fund transfer is also a mode of payment used in online purchase in
which the buyer transfer funds from his account to sellers account manually.
But in this method buyer must have the perfect details about the seller‟s bank
account. Ones the buyer has made payment, he should send a message to
seller about the payment.

4. PayPal
PayPal, a subsidiary of eBay Inc. is an e-commerce business allowing
payments and money transfer to be made through internet. A PayPal account
can be funded with an electronic debit from a bank account or by a credit card.
The recipient of a PayPal transfer can request a cheque from PayPal, establish
their own PayPal deposit account or request a transfer to their bank account.

PayPal performs payment processing for online vendors and commercial users
for which it charges a fee. It may also charge a fee for receiving money,
proportional to the amount received. The fees depend on the currency used,
the payment option used, the country of the sender, the country of recipient,
the amount sent and the recipient‟s account type.

The service allows members to send money without sharing financial

information, with the flexibility to pay using their account balances, bank
accounts, credit cards or promotional pricing. As PayPal is a financial
institution under Gramm-Leach-Bliley Act, it can‟t disclose its account
holders‟ non –public personal information to third parties. Only certain web
162
 stores accept PayPal because of the exchange rate fluctuations, many online
shoppers in India don‟t accept PayPal payments.

5. Demand Drafts and Money Orders

Majority of stores in India accept Demand Draft and Money Order. Both
instruments are pre-paid; the seller can easily cash them and process orders.

6. Cheques
It is time consuming process and slightly expensive as seller may ask to add
additional amount if it is an outstation cheque. Sending cheques for online
purchase is very easy. The buyer has to write a cheque in seller‟s name and
the banking system will take care of rest. Here buyer has to be sure that he has
enough funds in his bank when using this method as sending a bouncing
cheque is illegal in India.

7. Cash on Delivery
Nowadays one of the popular payment tools while purchasing online is Cash-
On-Delivery. It means that the buyer will pay only when he/she receive the
product. Indians are always suspicious about online shopping and this method
is an answer to alleviate the suspicion. Online sellers are also using this
method to gain trust among the buyers.

8. Cash before Delivery

In this method the service provider will send a proforma invoice in an
envelope through courier within 3 to 4 working days, the courier will deliver
this proforma invoice at the delivery address and collect cash equivalent to
order amount. Once the cash is collected by the courier, they will inform
service provider and service provider will expedite the delivery of product.
This method is time consuming one.

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 9. Interest Free EMI

Some websites also offer Interest Free EMIs as a payment system on selected
items. Buyer can purchase product and enjoy convenience of paying in 3 to 6
monthly installments using credit card.

10. Mobile Payment Solutions

Mobile payment is an alternative payment method in which instead of paying

with cash, cheque or credit card, a consumer can use mobile phone to pay for
purchases. According to KPMG report, Mobile transactions will require four
years to become widely accepted by consumer globally. Banks, credit card
companies, telecom operators and online service providers are expected to
benefit from the mobile payment transaction. Telecom operators like Airtel,
Vodafone, Idea and handset maker Nokia have partnership with banks for
mobile payment service.

2.4.6 Procedure to Purchase Online

Online shopping has increased tremendously over the last couple of years. Now
almost every product/software/hardware can be bought online. Though there is no
one specific procedure to purchase online. But majority of websites follow below
mention procedure. The procedure is as followed:

1. First of all customer has to register himself on a website. The registration

stage is shown in Figure 2.17. Customer has to make sure that he is entering
all information correctly as this information will be used for all transactions.
Customer has to mention his e-mail address, customer ID, password, address,
zip/postal code of city, mobile number. Customer has to read all the terms and
conditions of a service provider and then proceeds further. Certain websites

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 will allow the consumer to purchase product without registration. In this
method customer has to mention email and password and has to mention the
address on delivering the product.

Figure 2.17:- Registration Stage

2. Now whatever the product customer wants to purchase from the website, he
just has to mention the name of the product in the search box present on the
top in majority of websites as shown in Figure 2.18 with the help of arrow.

As soon as customer hit Enter, the next page will show the search results as
shown in Figure 2.19. The customer can sort the product by price; lowest first
or highest first. Also majority of websites clearly mention categories
available with them. The customer can click on the category that he wants to
purchase.

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Figure 2.18:- Search of Product as per Customer Requirement

Figure 2.19:- Search Result as per Category

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3. Once the customer has decided a particular product to buy, the next step is to
check the feedback given by customers.

As shown in Figure 2.20 certain websites display the comments mention by

visitors or customers who have purchased the product. Customer can read the
comments and look at the stars given by customers who have purchased the
product. Higher the stars and positive comments means higher is the
reliability.

Figure 2.20:- Recommendation Related to Products given by Customers

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4. As soon as customer is done with checking feedback points, the next step is to
read information regarding product. By putting the courser on the image of the
product, the customer can see quick look option and by pressing the option the
customer can see larger image of the product. The Figure 2.21 represents the
enlarge image of camera.

This option allows customer to have a close look of the product. Though
image of the product cannot substitute physically holding or examining the
product but it helps in creating a virtual product display.

Figure 2.21:- Enlarge Image of a Product

As shown in Figure 2.22 along with the image, the customer can read the
detailed description of the product along with warranty and shipping details.
Some services providers also provide free delivery if the customer is in the
same city.

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 Figure 2.22:- Product Specifications and Information

5. Before placing the order if the customer has some doubt regarding availability
of the product, he can contact seller in order to get the information regarding
product (Shown in Figure 2.23).

Figure 2.23:- Customer Support Service via Human Assistance

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6. As soon as the customer has received all the information regarding the product
and if he/she is satisfied with the product, it‟s time to buy the product.

Figure 2.24:- Procedure to Buy Product

7. By selecting the number of quantities and size (if required) related to product
as shown in Figure 2.25, the customer can click on Buy. In case customer
wants to purchase more products, then he should select Add to cart and
continue shopping.

Figure 2.25:- Quantity of Product to be Purchase

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 8. At the time of making purchase of more than one product, the customer
can select product and than he can add to wish list or customer can directly
click on Buy Now. If customer select add to wish list then in next stage he
has to add that product into shopping cart by pressing Add to shopping
cart button. If the customer will select Buy Now option then he will move
on to next page which will display Order Information as shown in Figure
2.26.

Figure 2.26:- Shipping Cart

At this time the buyer can select the quantity of product that he wants to
purchase. If the buyer wants to drop any product, than he can also drop the
product at this time.

9. The immediate next page after clicking Buy It Now or Proceed to checkout
shows complete item cost including shipping, item quantity and shipping
address (that the customer has entered while registering on website) and
various payment modes as shown in Figure 2.27. The customer can select

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mode of payment appropriate to him and then move further by click on
Continue.

Figure 2.27:- Multiple Payment Modes offered by E-Retailer

The next page will show the complete order details as shown in Figure 2.28.
The customer can confirm order and move to payment procedure. Payment
procedure will take some moments, depending upon type of the payment
option the customer has selected and once it‟s completed, the customer will
get Payment summary.

Figure 2.28:- Details of Order

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 10. The item that customer ordered may take 2 to 3 Days (can be more) to reach at
the address. Once the customer received the item, he can leave feedback for
the seller if he wishes.

2.4.7 Advantages of E-retailing

E-retailing offers unique advantages to the consumer that no other form of

retailing can match. E-retailing is beneficial to both consumers and retailers.
The advantages to consumer include:

1. More vendors and alternatives available

In the online environment, there are more vendors and alternatives available to
customers. So customers can easily reach all the e-retailers around the world.

2. Comparison is much easier

At a time of online shopping it is easy for the customer to switch between
different retailers‟ website. So comparison about price and feature of certain
products easier compared to off-line purchase.

3. Price of merchandise may be cheaper

Due to the cost saving for the retailers and to cope with the competition
online, merchandise sold online may be cheaper than those sold in traditional
way.

4. Time saving and convenience

A number of people prefer to shop online because it will save a lot of time and
it will also eliminate hassle to stand in queue for billing or may save the time
and cost of transportation. Along with that all the products that have been
ordered online will be delivered to the home. Customer can also purchase
online at any time as per their conveniency.

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 The advantages to the service provider

1. Cost saving
Online business will significantly bring the cost down, especially pure play e-
retailers. Online retailer can cut a lot of cost because they do not need to build
physical store and they also have less paper work compared to offline
retailers.

2. Reach more customers

Online retailers have the opportunity to enlarge their customer database. It
helps e-retailers to reach more customers than before.

3. Better customer service

Retailers can personally attend each and every of their customers with
personalized websites, buying suggestions and personalized special offers.
Further they can give customers the advantages of incentives and sales
promotions online including coupons, special offers and discounts.

4. Customized product placement

It is easy for the e-retailer to make any change in user display based on
previous transaction, so that the visibility of goods that the users prefer the
most will increase. Thus placement can be designed based on the context of
the previous purchase.

2.4.8 Disadvantages to E-Retailers

1. Limited only to online users

The users of internet are limited so e-retailer does not have access to all
customers. Even out of web users only a limited number of people prefer to
purchase online.

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2. User-friendliness
All the websites are not user-friendly. Some websites have complex design
which may be difficult for the customer to access and purchase online.
Graphics presentation and aesthetics may not be as compelling for a website
as in case of physical retail store.

3. Trust, security and privacy concern

It is difficult to develop trust on e-retailer as some times customers do not
even know them. At a time of paying via credit card or debit card there is
always a concern about trust that company will not misuse the number.
Further there has been a case of online hacking so customer is concern about
security. There is a concern about the privacy as e-retailers will not share our
personal information like mobile number, address with anyone else.

4. Unsuitable for certain product categories

Product categories that require relatively higher customer involvement, it is
difficult to adopt the e-retailing format as it is ineffective to provide sufficient
information to the customers. Examples include retailing of products like
clothes, cosmetics etc. Most of the customers prefer to buy books or event
tickets from internet as the information required for making purchase and
involvement required is low. But in case of garments customer may want to
know a number of things like looks, size, feel on the skin etc. In offline
retailing these types of problems will not arise.

5. Shopping is still touch-feel-hear experience

In countries like India where people don‟t suffer from „time-poverty‟,
shopping is considered to be family outing. Hence these types of problems
also create a problem of customer retention.

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2.4.9 Success Factors for E-Retailing

The success of e-retailing depends on a number of factors that are required to be

taken into consideration as prima-facie, missing even a single small consideration
is quite liable to create a greater negative impact on entire business since in e-
retailing there is no direct contact between customer and business.

Following are some of the factors to be taken care of for the success of e-retailing.

1. Strong Branding
The service provider has to develop brand name and has to create positive
image and trust in the minds of customers regarding their website compare to
the competitor. A number of e-retailers have failed such as pets.com,
garden.com in 2000 because they were not able to build strong brand image
and customer loyalty in target market. For developing strong Branding, the
company can appoint a brand ambassador to whom people consider as
reliable. Company can focus on social responsibility. If company is able to
develop trust in the minds of customers than only they will become
successful.

2. Unique Merchandise
E-retailers can achieve competitive advantage by selling unique merchandise
online. Along with selling large product mix, companies must sell products
which are unique in feature, size, shape, color along with customization if
possible.

3. Competitive Pricing
E-retailer has to ensure that products are sold at competitive pricing to attract
customers and to stay in the competition. Because competitive pricing may
pull price sensitive customers to purchase online. The competitive pricing
finds scope from potential decrease in charges and expenditures that retailer
had to bear while in brick and mortar mode of marketing. But retailers have to
be careful at a time of adopting competitive pricing as if e-retailers were not

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 able to pull the crowd at competitive pricing than low price margin leads to
loss and even close the business.

4. Better Customer Relationship Management

It is very difficult for e-retailers to retain customers. But by developing
relationship with the customers e-retailers can build loyalty. Along with
sending sms and mail during occasions, e-retailers can also developed CRM
programme by offering different types of membership.

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2.4.10 Global E-Retail

Global e-commerce, including travel and auto purchases as well as online retail
sales will increase 13.5 percent annually for the next four to five years and reach
an estimated US $ 1.4 trillion in the year 2015 according to Cisco Systems Inc‟s
Economic & Research Practice11. The global retail online sales grow by 14.5
percent in the year 2009 and reached at US $ 348.6 billion USD12. Electronics
was the largest segment in global retail sale contributing around 22.6 percent.

Figure 2.29: Comparison of Growth of Traditional V/S Online Retail (Year

2006-2009)

25.00%
22.70% 22.10%
20.00%

15.00% 14.50%
12.40%
10.90% Traditioal Retail
10.00% 9.40% Growth
7.20%
Online Retail Growth
5.00%

0.00%
2006 2007 2008 2009
-3.70%
-5.00%

-10.00%

(Source: EIU, Datamonitor, IMAP)

While the online retail sales sector continues to outperform, its magnitude
remains small with 2.5 percent of total global retail sales. On an average basis,
globally, online sales accounts for 6.6 percent of total sales for the top 100
retailers in the year 200913. As per IMRG the global e-retail sales increased by
almost 25 percent to 591bn euro in the year 2010.

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As per Forrester Research, September 2010, between the year 2005 and year
2009, the global online population increases from 1 billion to more than 1.6
billion and by the year 2014 it is projected to grow by another 42 percent,
reaching at a level of 2.3 billion. Most of the growth in online population is
expected to come from Asia-Pacific, Middle East and Africa, which had very
low internet penetration of 19.7 percent as of June 2010 and will reach at 54.9
percent till the year 2014.

Table 2.6:- Global Online Population (In Millions)

Region 2009 2010 2012E

259 266 292

North America
415 475 500
Europe
645 846 1033
Asia Pacific
178 204 255
Latin America and Caribbean
135 173 241
Middle East and Africa
1632 1964 2321
Total

(Source: Forrester Research Inc. and Internetworldstas.com, June 2010)

North America and Europe will represent 34.1 percent. Emerging Asian
countries such as Vietnam and Indonesia are expected to have nearly 10 percent
of global online users by the year 2014. As per Data monitor, July 2010 global
online retail sales are expected to be $ 778.6 billion USD, increasing at a CAGR
of 22.2 percent till the year 2014.

The US remains biggest market for online retail with 37.2 percent market share.
Total spending reached US $129.8 billion USD in the year 2009. In the year
2009, 154 million US consumers made online purchase, representing 67 percent
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of those who use internet and 4 percent increase from the year 2008. The
research and consulting firm Forrester Research Inc. reported that online retail
sales will grow by 10 percent year on year for next five years and web will
influence 53 percent of US retail sales by the year 2014. By the year 2014, e-
retail sales will reach at US $ 249 billion contributing 8 percent of total retail
sales14.

European e- retail sales grew by 18 percent from the year 2009 to the year 2010
and are expected to grow 13 percent in the year 2011. The number of online
buyers in Europe will reach 205 million from 157 million in coming years. And
e-retail will contribute to 10 percent of total retail sales by the year 2012.As per
Forrester Research February 2011; Europe e-retail sales will grow from US S
112.1 billion in the year 2010 to US $ 184.6 billion by the year 2015, at a
compound annual growth rate of 10 percent15.

E-retail sales in Brazil are also expected to increase by a compound annual

growth rate of 17.5 percent over next five years, Forrester Research predict in
April 2011 report. The e-retail sales were S7.9 billion in the year 2010 and
projected to reach at $ 9.8 billion by the year 2011 and $ 19.2 billion by the year
2015.

Chinese online retailers are also poised for massive growth. About one-third of
China‟s 420 million internet users shop online16. As per Analysis International
research data, the transaction value Chinese B2C online retail market has reached
$ 7.3 billion in first quarter of year 2011. Taobao is the market leader (31.4
percent) followed by 360buy (10.2 percent) and Joyo (Amazon China, 2.3
percent) 17.

South Africa has also shown tremendous growth. The online Retail in SA 2011
research report reveals that the spent on online retail goods in South Africa

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 surpassed the R2-billion mark in 2010 and climbed to R2.028 billion, growing at
30 percent compared to 200918.

2.4.11 Indian E-Retail

According to Digital Route LLC estimates, in India the retail e-commerce market
in 2008 was tiny fraction of the total retail market which was 0.1 percent and is
expected to reach S 4bn by the year 2013. Retail e-commerce share will increase
rapidly due to much faster growth compared to overall retail market.

Table 2.7:- B2C E-Commerce Sales in India (in S MM)

Indian B2C E-Commerce ( $ MM)

10-13
Sales in MM 2008 2009 2010E 2011E 2012E 2013E
CAGR

B2C 14.6
$ $ $ $ $ $
E-Commerce percent
325000 365000 415000 475000 545000 625000
(Y/Y Change)

Total Retail 107.1

E-Commerce* $200 $250 $ 450 $675 $2000 $ 4000
percent
(Y/Y Change)

E-Commerce
as percentage
0.1 0.1 0.1 0.1 0.4 0.6
of Retail ( In
Percentage)

*Excludes sales of travel, financial services, online classification and event ticket.

(Source: PhoCusWright; Digital Route LLC estimates)

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 As per the prediction, retail E-commerce will touch $ 4bn by the year 2013 from
$ 450 million in the year 2010 which means its penetration will achieve 0.6
percent which is far below US at 6 percent and China at 7 percent. A study
conducted by ASSOCHAM found that 65 percent of Mumbai residents shop
online. The rising fuel price is keeping most of the shoppers indoor and
encouraging them to embrace the new online mode of shopping. The study
conducted in 10 Indian cities also claims that the online retail industry in India is
likely to be worth Rs. 7000 crore by the year 2015. The Nielsen Company has
also announced findings of its „Global Online Shopping Report‟ conducted in
September 2010. In India they have done survey of 502 samples. The findings of
survey revealed that out of total respondents 23 percent had never shopped
online.

Figure 2.30:-Sources of Recommendation for Online Purchase

Friends 64

Family 71

Online product reviwes 29

Product websites 24

Discussion forums 9

Search engines 15

Social media sites 6

TV 19

News Source 10

Influential bloggers 3

Unknown peers 3

(Source: „Global Online Shopping Report‟ conducted in September 2010)

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 The finding suggests that along with friends and family, the major sources of
recommendation for purchase online is online product review given by the
shoppers of the product.

2.4.12 ONLINE SHOPPING PROVIDERS IN INDIA

1. HomeShop18.com
Homeshop18 is the online and on-air retail marketing and distribution venture
of Nerwork18 group that was launched as India‟s first 24 hour Home
Shopping TV channel on April 9, 2008. Homeshop18 is a venture of the
Network18 Group, India‟s fastest growing media and entertainment group that
operates India‟s leading business news television channel like CNBC TV18,
CNBC Awaaz.

Homeshop18 has partnered with the best brand owners in India like Apple,
Motorola, Reebok, Dell, Whirlpool, Nokia, VLCC, Fabindia and many more
to provide superior quality at an exceptional value to final consumer. The
company has huge variety of products which include books, mobiles,
electronics, computers, apparel, jewellery and so on. To make aware about the
product and to explain the usage of the product, the company is giving honest
demos, providing 15- day- Money-back Guarantee (applicable on products
that have money back guarantee specially mentioned), 24 hours customer
care, online customer review, well designed frequently asked question section,
special pricing . The company also offer free shipping on selected products
ordered through website. The delivery is very quick (3 to 5 days). Consumer
can also track shipping order from the website.

HomeShop18 has won a number of awards that include “Award for

Excellence in Retailing” at Indian Retail Forum 2010, “Best Shoppers Insight
Model” at Asia Retail Congress 2010 and so on. In its online format,

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 HomeShop18 provides a number of payment modes which includes payment
by debit/credit card, cash on delivery, cash before delivery, payment by
DD/Cheque, Net Banking, Mobile Payment option, Internet Free EMIs. Along
with that the company has secured payment system as company has
participated in VeriSign Secured Seal programme. All the personal
information is encrypted by Secure Sockets Layer (SSL) software when it‟s
transmitted to us via internet to any website address beginning with https.
Today company has emerged as the largest multimedia retailer in India with a
user base of 2.5 million users19.

2. Future bazaar.com

FutureBazaar.com is the e-commerce arm of the Future Group. FutureBazaar

is an integrated shopping site where consumers are able to buy products from
website. Consumers can also purchase products from their flagship stores that
include eZone, Pantaloons and Big Bazaar.

FutureBazaar delivers across more than 1500 cities and towns in India
covering 16,000 pin codes20. FutureBazaar carries genuine products and offers
manufacturer's warranty too. FutureBazaar sell wide product categories that
include computer, clothing & accessories, home and kitchen utility, mobile,
electronics and so on.

3. eBay

Founded in September 1995, eBay is a global online marketplace where

practically anyone can trade practically anything. eBay community includes
more than 90 million active users from all around the world21. Worldwide
leader eBay is doing well in India. Backed by a powerful brand, customer
loyalty and experience in online retail, it has generated good traction in India.
eBay entered to India by acquiring Baazee.com in June 2004 for Rs. 230

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 crore22. eBay first started off as an auction site for individuals to sell their
products to other individuals. But now it can be considered a B2C portal as
well because business corporates are marketing their products to get end users
interested in their goods. India has community of over 2.5 million registered
users across 2471 towns in India. eBay users trade in more than 50,000
categories including antique, computer, IT and office, toys, dolls, stamps,
comics, magazines, glass, jewellery and so on. The company uses the latest
VeriSign SSL encryption technology to protect details related to payment.

4. Flipkart.com
Flipkart was founded in the year 2007 by two driven IIT graduates Sachin
Bansal and Binny Bansal, launched as an online bookstore for India. Within
two years and workforce no more than five people, purely through word of
mouth of amazing service, Flipkart became the Top 100 Indian sites and was
credited for being India‟s largest online bookseller with over 10 million titles
on offer. Today they have huge product category that include mobile phones,
gaming consoles, electronics, music and movies. Today company has more
than 1000 employees. Flipkart has 24*7 customer support service, multiple
payment options; secure payment system, 30 Day replacement Guarantee.

5. Infibeam.com
It was established in the year 2007 as online book retailer. Today the company
has huge product category including books, mobile phones, computer and
accessories, cameras, watches, health equipments, chocolates, flowers, combo
gifts and much more. And company is offering all the products at guaranteed
lowest price. Infibeam has an excellent search engine and providing editorial
as well as technical specification related to product. Company has also
developed customer relationship management in the form of Magic Box. The
company has 24*7 customer service and company is multiple payment
options. Company has placed themselves by providing unique services like

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 same day delivery or mid night gifts in selected cities. Company has secured
payment option with VeriSign Security.

6. Naaptol.com
It was launched in January 2008. Naaptol has grown to become India‟s
leading comparison based social shopping portal, the one stop destination for
all shoppers and merchants. Naaptol doesn‟t sell the product but it helps
people to buy product. Naaptol claims to offer a trusted network on the
website, a comparative price list as well as list of local sellers as per user‟s
locality is displayed. From nil sellers, Naaptol has grown to 500 stores in its
portfolio and still adding more. There are around 470 brands associated with
naaptol. Company has customer support service and company is offering
multiple payment options. Company has not mentioned anything about
payment security on front page of site.

7. Shopping.indiatimes.com
Indiatimes.com is owned by Times Internet Limited which has been in the
internet space for over ten years and claims to be a very large and successful
internet company in India. Indiatimes.com, a shopping portal is one of India‟s
most popular e-commerce website. It has widest range of consumer electronic
items, apparel, accessories, gift items, home and kitchen appliances, jewellery,
books and so on. The website is only a venue where users may meet and
interact with another for their sale of purchase transaction. TIL only work as a
facilitator for such sale and all commercial terms are offered by and agreed to
between buyer and seller alone. The company has seven day return policy and
customer service desk and also having online chat service to solve queries of
buyers. Company has placed its image by providing innovative services like
delivering gifts and flowers during birthday, rakhis during rakshabandha
within India as well as abroad.

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 8. Indiaplaza.in
Indiaplaza.in (earlier Fabmall.com) pioneered the concept of online shopping
in India. Since 1999, Indianplaza.in has served millions of customers online
with a huge selection of over 8 million items provided at low price and
reliable service. The Indiaplaza.in has online store for books, CD-ROMs,
electronics, mobile phones, appliances, apparel, flowers, chocolate, cakes,
sweets, toys, handicraft, watches, food items and so on. The company takes
normally five days to ship within India. Company is providing support to
customers via call centre from 8:00 am to 20:30 pm and also has secured
payment system having EV SSL class 3 VeriSign. Indiaplaza has also
developed positive image with innovative practices like delivering rakhi to
USA, UK and other parts of world within three days.

2.4.13 Market Size of E-Tailing

E-Tailing comprises of buying consumer items such as cameras, computers, home

& kitchen appliances, flowers and toys, gifts online. This category has grown
from INR 978 crores in the year 2007 to INR 1,550 in the year 2009.

Figure 2.31:- Market Size of E-Retailing (Year 2007-2011)

E-Tailing (In Crores)

2700
2050
1550
979 1120

Dec-07 Dec-09 Dec-09 Dec-10* Dec-11*

(Source: Report of Online Commerce: March 2011, IAMAI)

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2.4.14 Component Share of E-Tailing of India

Table 2.8:- Component share of E-Tailing

Component share of E-Tailing ( Total INR 1550 Crores -2009)

Component Market Size Percentage

Computer, Accessories, Storage and peripheral 560 36

Camera and Mobile 389 25

Personal Items ( Apparels, Jewellery ) 296 19

Electronic Durable 203 13

Home and Kitchen Appliances 62 4

Other Products ( Gifts, Toys, Flowers) 40 3

(Source: Report of Online Commerce: March 2011, IAMAI)

At present, PCs, laptops, computer peripherals, accessories and storage, contribute

the most 36 percent (INR 560 crores) to e-tailing followed by cameras & mobiles
contributing 25 percent (INR 389 crores). Personal items such as jewellery,
apparels, cosmetics, apparels, shoes and watches contribute 19 percent (INR 296
crores) whereas Electronic items like TV, Audio systems & other accessories
account for 13 percent (INR 203 crores) Balance 7 percent is contributed by
Home & kitchen appliances (4 percent) and other online buying (toys, gifts,
flowers etc.)

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2.4.15 What Sells well on the Web in India?

Table 2.9:- Categories of Product and Services India Purchase Online

Percent of Online Buyers
Category
Present Future

41 44
Books
40 53
Electronic gadgets
39 48
Railway tickets
36 31
Accessories
36 38
Apparels
35 34
Gifts
33 42
Computer and peripherals
29 46
Airline tickets
24 33
Music

(Source: IAMAI)

As shown in the table, most of the products sold well on the website are standard
merchandises such as books which didn‟t required personal touch and
examination when customers purchase it. While categories like apparel and gifts
required physical orientation so they are sold less.

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2.4.16 Challenges Faced by E-Retailing in India

1. Unproven Business Model

In the formative years of dot-com era, most of the business on the net were
experiments in new areas and didn‟t provide stable source of profit. This was
the primary reason for failure for a number of e-retailers in the beginning of
the century. Though dot-com business have matured a bit, still some of the
businesses are at experimental level and don‟t guarantee regular revenue.

2. Requirement To Change Business Process

The process of procurement, storage and logistics in e-retailing is different
from that in traditional brick store business. The e-retail organization has to
carefully redesign and integrate various processes to suit e-business.
Traditional retailers require the goods to be present at the warehouse and
inspected before being shipped to the customers but in e-retailing shipping of
goods from one place to another to a customer are not possible. E-retailer has
to appoint local supplier at the city where the customer reside and instruct the
supplier to deliver goods. But this process requires a lot of faith in supplier as
supplier would follow the instructions and deliver the same goods.
Merchandise planning and demand analysis is also difficult in e-retailing
compared to traditional retail business.

3. Channel Conflict
Companies selling through internet as well as through brick store may find
their interest conflicting at many places. As in e-retailing, the goods directly
reach the end-user, so the distributor and seller may feel the threat to
existence. Also at a time of selling online, the retailers tend to reduce price.
In that case the sale of brick store may drop as the retailer may tend to sell
more through internet because of price reduction.

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4. Security and Privacy
Security is also one of the major challenges in digital world. Despite a lot of
security arrangements, such as password and firewall, a number of times
cases of website hacking and pilferages happened. People also hesitant to
give their credit card number and personal information on the net as they
may be misused. Cyber criminals have exploited the weakness and have
broken into computer systems, retrieving password and banking information.
Security of payment gateway is a major concern which has to be taken care
by retailer by arranging proper security layers.

5. Inability of E-Retail Players to convince Offline Customer for Online

Purchase
Majority of online retailers have yet not promoted online shopping with
proper advertisement and marketing, also they were not able to creates brand
image in the mind of customers. Online players must aware customers by
demonstrating how to purchase online, how to pay online etc.

6. Issues Concerning Security And Transaction Frauds

A number of web portals don‟t support online modes of payments. There is
high occurrence of failed payment which can be a major restriction for clients
to revisit the portal. Also the hacking of website cases is also there in India.
The website of future group, future bazaar was hacked for two days. People
in India also use cash for most of its transactions. Though now a days service
providers came with other payment modes but still less penetration of credit
card is a major barrier to e-retailing.

7. Knowledge Regarding Online Purchase

In India still people don‟t know how to purchase online. Even majority of
people are not aware about the format of online selling. This is also working
as a major barrier to online purchasing.

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8. Advanced Retail Networks
The existing traditional retail network have served consumer very well as
most of the retail networks are within walking distance of residence. All
necessarily things are available nearby home. This makes e-retailing less
convenience than it might be and work as a barrier.

9. Usage Of Credit Card

Credit cards are the prime mode of payment in online retail. People tend to
make transactions while booking travel tickets, hotels, buying books etc.
However India is lagging in the number of credit card circulation. Future
Group reports that 50 percent of sale – about $ 6.5 million worth of
transactions daily at its 1100 supermarket, departmental stores and other
stores are now made with cards. Though Euromonitor report says that only 1
percent of India‟s overall consumer spending comes from debit, credit and
other cards.
Table 2.10:-Credit Card Usage among Countries

No. of Credit Cards Outstanding Credit

Country
( Million) Card Debt ( billions)

624.8 $822.8
USA

199.5 $38.8
China

41.6 $6.2
Taiwan

324.0 $2.9
Japan

9.4 $2.7
Hongkong

5.4 $2.6
Singapore

24.7 $1.2
India

All data as per year end 2009.Fig. converted to US dollar based on exchange rates as on
Dec 31,2009

(Source: Auriemma Consulting Group, Euromonitor International, government & industry

data)

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2.4.17 E-Retail Success Model
Molla and Licker (2001) suggest that an e-commerce system has additional
constructs which are not captured by traditional measurements of the quality of
information and information system, such as 24-hour availability, stability of
software and hardware, page downloading speed, accessibility, up-to-date
accuracy, comprehensiveness, understanding and so forth. Trust and service are
also important components of e-commerce system.

Figure 2.32:-E-Retail Success Model

Content
Quality

Product System
Purchase Quality

E-Retail
Success

Order Support &

Confirmation Trust

Support and
Study

(Source: Molla and Licker 2001, Modified for Research)

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The factors contribute to the success of e-commerce are as followed:

1. System Quality

System quality measures “the desired characteristics of an e- commerce

system”. Online system quality can be divided into information system quality
and information quality. Information system quality refers to the quality of
software development whereas information quality pertains to the accuracy,
timeliness, current and reliable information. The poor quality website system
will have a negative influence on the customer‟s online shopping experience
and customer satisfaction with the site. A number of researchers have done
study and found variables that include system quality. Those variables include
response time, ease-of-use, and webpage downloading speed and website
navigation system.

One of the important aspects of online system is to enable customers to

function more independently and conduct many transactions on their own.
Customer often seeks desired product information through website. Therefore
website should be well organized enabling customers to navigate smoothly
and in an enjoyable manner. Horsti (2005) noted that ease-of-use is one of the
most important factors for an e-commerce system. Cognitiative found ease of
site navigation (website should be easy to find on net and easy to use) to be
the most important reason for developing customer‟s loyalty.

Ease of use is considered one of the most important factors to customers on

the Internet (Eighmey and McCord 1998; Fram and Grady 1995). Ease of use
is the ability of a customer to find information or enact a transaction with the
least amount of effort. This concept has been characterized as the customer‟s
ability to use as few “clicks” as possible. Ease of use also includes the issue of
navigation. Navigation is having consistent menus that lead to key pages on a
site. A clear navigation aid allows visitors to know where they are on a site
and provides the ability to find their way back to a previous menu screen.

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 Ease of use also includes effective search engines, the ability to easily change
or cancel an order, and the ability to inform customers of missing information.

The quality website should be available 24 hours a day, seven days a week
and at fast speed. The speed of download is positively related to the number of
pages accessed, time spent at a website.

2. Content Quality
Content is the soul of a website. Content is comprised of the words or text on
a webpage along with the graphics and structure of a website. A
professionally designed websites are not only user friendly but systematic
efforts are made to make site attractive and sophisticated with help of graphic
designing and appropriate colour schemes as shown in Figure 2.33. Content
quality refers to the characteristics and presentation of information in the
website. Szymanski also added that superior product information did impact
on e-satisfaction. He further added that good site design includes having fast,
uncluttered and easy to navigation sites.
Figure 2.33:- Professional Web-Design

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Web content is the best tool for building relation with potential customers.
The looks and the feel of a site is crucial but the quality of the web content
may be more important. Again due to the nature of virtual environment,
customers can‟t physically touch the products before the purchase, so the
website information content is the best way to understand the product. Some
researchers argued that content quality may be more important than system
quality and they defined content quality as the characteristics and presentation
of information in e-commerce system. According to Alba et al. (1997), quality
of information is the degree to which consumers can use the information prior
to purchase, to predict their satisfaction from subsequent consumption.

Previous researchers have explored many attributes of content such as

accuracy, up-to-dateness, comprehensiveness, understandability and
completeness. Epstein (2005) suggested that accurate information on the
associated physical store, customer service and delivery and return policies
should be easily accessible from the homepage.

Website information should also include new product or special offers and the
company‟s contact information. As the company information will enhance the
customer‟s trust towards website and new products will reach to the customers
with minimum clicks. There should not be the duplicate of the content. For
maximizing sales, website should allow user to find what he is looking for as
quickly as possible. So effective search engine is also very important. Unique,
interesting and relevant should be the mantra that service players must adopt
while designing website.

Charles Duncombe, Director of „Just Say Please‟ said that Spelling is also
important to the creditability of the website. Poor spelling can undermine a
website‟s authority, causing users to question whether it is legitimate and safe
to use. He further added that spelling has become increasingly important to e-

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 retailers as web users have become increasingly concerned with fraud and
identify theft.

3. Trust
Along with content quality and system quality, research findings also
suggested that trust has an important effect on the use of e-commerce and user
satisfaction, as in online purchase uncertainties are very high. A number of
studies found that trust is one of the most important factors of e-commerce.
Mayer et al., 1995, pg.172 define trust as the willingness of a party to be
vulnerable to the action of another party based of the expectation that the
order will perform a particular action important to the trustor, irrespective of
the ability to monitor or control that other party. Online consumers generally
stay away from e- service providers whom they don‟t trust. Ba and Pavlou
(2002) found that higher level trust leads to higher prices, as the customer
would be prepared to pay higher price on trusted website. All the above
mention studies show that trust has an effect on the success of e-commerce.

Quickly establishing trust is critical in e-commerce sales. Taylor Nelson

Sofre‟s 2006 survey showed that customers terminate 70 percent of online
purchase because of lack of trust. Study suggest that the average conversation
rate for first time visitors is 2.5 percent which mean that only two customers
for every hundred visitors. E-commerce service providers can easily increase
the number only by placing a few trust elements in key location of website.

According to previous researchers, trust-related factors include security,

privacy and product quality. Privacy refers to the ability of an individual to
keep his/her identity confidential during the course of a transaction and the
protection of various types of data that are collected. Privacy protection is a
primary factor influencing customers‟ online purchase decision and their
satisfaction and loyalty to online business.

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Turban et al. (2004) suggested that customers should be given notice of the
collection of personal information and that their consent be necessary to
prevent or allow the collection of information. Therefore, research has shown
that e-tailers who give a high priority to customer privacy will benefit by
increasing the customer‟s opinion of their site. A study conducted by IAMAI
revealed that lack of trust is the major reason given for not shopping online.

Security is another important issue related to trust. Security relates to the

protection of information or system from unsanctioned intrusion. A study
conducted by Eurobarometer (2004) revealed that the prime reason for not
using e-purchase facility was security of payment. Along with that 36 percent
of respondents also revealed that lack of security related to getting warranty of
refund was a major reason to avoid e-shopping

A number of Trustmark seals have been developed to provide assurance about

Web business practices and policies through the Web interface. Third party
security seal (shown in Figure 2.34) are increasingly used by business to
communicate their commitment to security (Belanger et al, 2002). A survey
conducted for Privacy and American Business found that 62 percent of
consumers believe that third party privacy seals would reduce their privacy
concerns.

Security has three main concepts which are confidentiality, integrity and
availability. Confidentiality allows only authorized parties to read protected
information. Integrity ensures that data remains as is from the sender to
receiver and Availability ensures you have access and authorized to resources.
Customers would like to conduct more online shopping activities through a
secured website and from organizations that have developed better brand
image. Therefore security issue should be addressed by e-retailers, to increase
sales and build a positive brand image.

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Figure 2.34:- Acquiring Third Party Service (VeriSign Logo)

The product quality also affects the trust of consumer while purchasing from
website. Sometimes the problem of product quality arises due to the mismatch
between description of product and understanding from customer. Due to the
nature of virtual environment, consumer has difficulty identifying the online
trading parties and product quality because of lack of physical contact.

Pavlou and Gefen (2004) suggested that Escrow services and credit cards are
useful in solving the security problem. Escrow services act as a trusted third
party in a transaction, and provide secure methods to transfer items and
payments between two trading partners (Ba et al. 2002), and can serve to
bridge the gap of trust between buyers and sellers (IDA 2001). Credit card
guarantees and e-commerce insurance will provide resources by reducing the
buyer‟s monetary liability in case of illegal seller behavior (IDA 2001).

Some of the studies also supported that to build customer trust; company must
provide its address, contact number, e-mail address, fax number on the front

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 page. Along with that the company should develop a section called “About
Us”, in which they should mention brief history and board of directors and
achievements if any.

4. Support and Service

Customers value highly the support and service the service providers provide
during all phases (pre, during, after-sales) of the transaction. Studies suggest
that high quality service would encourage customers to pay higher price for a
product. Service quality is positively related to the success of e-retail service
provider as it will reduce the perceived risk and create loyalty in customers
towards the virtual store. Santos. (2003) suggested that high service quality
can potentially increase the attractiveness, hit rate, customer retention and
positive word of mouth reputation and can maximize the online competitive
advantage to the website.

Many of the researchers (Su et al. (2008), Zeithml et al. (2002) concluded that
e-commerce services are facing many difficulties when trying to deliver
quality signals to customers. So they have to start focusing more on delivering
efficiently products and services, guarantee the quality of goods, offer
consumer service online but also offline (e.g. after sales service, community,
response to complain) and invest in better and safer online transaction. Mao,
D. suggested that some of the value-added services provided to customers
apart from just selling the product could be secure and fast delivery, reliable
payment methods, certificate of quality assurance, and after-sale service etc

Different dimensions of online service quality have been mentioned by

various researchers. Wang (2003) stated that e-service quality consists of four
dimensions: efficiency, reliability, fulfillment and privacy. Many services
and support activities have been identified by researchers which are associated
with the above mention dimensions such as human assistance, frequently

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asked questions, provision for feedback, personalization and online
communities.
Figure 2.35:- Support and Service Links

Effective customer support along with the transaction line from pre-sale to
post-sale would reduce the uncertainty and risk. To reduce the anxiety it is
necessary to have both computer based and human based assistance, such as
Frequently Asked Questions (FAQs) as shown in Figure 2.36 and call centre.
Computer based assistance include FAQs, search engines and website
instructions. An effective search engine can quickly provide right information
to the customer. Though human based assistance is more effective as in case
of any mistake, customer can immediately call or chat with person and reduce
anxiety.

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Figure 2.36:- FAQs Section

Delivery is another most important issue in online service. A number of

researchers such as have studied Xaun (2007), Turban et al. (2004), Wang
(2003) have studied the delivery issue of online transaction. Customer want
reliable delivery from reputed delivery companies with reasonable charges
and delivery options. While Cho (2004) said that an inability to physically
examine the good and concerns over delivery and return can be viewed as a
liability or disadvantage for e-shopping. Researchers have suggested that e-
retailers should develop a proper return policy, privacy policy (shown in
Figure 2.37) and provide customer with a number of product return policy to
reduce anxiety. Agrawal et al. (2002) suggested that e-retailers have to allow
customer to return defective or unwanted merchandise.

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Figure 2.37:- Privacy Policy

According to E-commerce and Internet Auction Fraud: The E-Bay

Community Model (2004)., non–delivery of goods was another major fraud
happened on e-commerce website. A number of researchers such as have
studied Xaun (2007), Turban et al. (2004), Wang (2003) have studied the
delivery issue of online transaction. Customer want reliable delivery from
reputed delivery companies with reasonable charges and delivery options.
While Cho (2004) said that an inability to physically examine the good and
concerns over delivery and return can be viewed as a liability or disadvantage
for e-shopping. Agrawal et al. (2002) suggested that e-retailers have to allow
customer to return defective or unwanted merchandise.

Feedback and online communities are other useful parameters in customer

service avenue. Feedback (shown in Figure 2.38) and online communities can
build e-retailer‟s reputation and enhance trust. An online community improves
communication and personalization of service. Communication is the primary
activity in communities and knowing the details of whom you are

203
 communicating with is essential for understanding and evaluating an
interaction. E-seller must empower customers through a better listening of
complaints and a better customer service else e-buyers will keep moving
forward to a more personalize and fragmented market.

Figure 2.38:- Provision for Feedback

5. Order Confirmation
According to E-commerce and Internet Auction Fraud: The E-Bay
Community Model (2004)., Fee stacking was an issue which involves adding
hidden charges to the item after the purchase is over to obtain more money.
Instead of flat rate for postage and handling, the seller adds separate charges
for postage, handling and shipping. As a result buyer has to pay more. Studies
also suggest that „Zero Percent interest rate‟ scheme can be problematic and
hidden charges are also involved if customer couldn‟t pay nothing or only a
little during the allotted time," Nixon said. "If that happens, then you‟ll likely
be charged an interest rate as high as 25 or 30 percent. You could end up

204
paying much more for the item than you ever thought you would." A number
of sites also charge the transportation cost in case of returning of the product.
In case of quick delivery, a common hidden fee that shoppers fall victim of is
expedited shipping prices. The cost of ground transportation can be very
reasonable, but if customer need to receive an item quickly, it is advisable to
purchase form offline retailer. Online prices for overnight and second day
delivery can be outrageously expensive, sometimes even more than the item
you're purchasing.

The terms and condition (shown in Figure 2.39) apply to purchase online vary
from country to country. The retailer must mention clear terms and conditions
related to purchase which should involve the return policy, privacy policy,
return policy and disclaimer. Terms of service are an important part of any
contract or service provision but customer should always be wary of excessive
amounts of terms and conditions as these often are used to hide sub-clauses
that include further charges. If customer is making a seemingly small purchase
the terms and conditions should be clear and no longer than one page.

Figure 2.39:- Terms and Conditions Mentioned in E-Retailing Website

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 Delivery time is an important parameter in online shopping. The company
must deliver the product within mentioned time on the website. Customers
want fast and safe delivery so e-retailers must appoint reputed delivery
companies to deliver the product. Studies suggest that the product is delivered
within stipulated time add the satisfaction level of customer and yield
repetitive purchase. Collier,J. suggested that order timeliness which refers to
receiving the product within an expected amount of time is a most important
aspect contribute to service quality.

6. Product Purchase

Though registration is an important aspect to purchase from website but a

number of studied confirm that a long registration process discourage the
customer to purchase from website. A number of e-retail websites force
customers to register at a time of purchasing a product. Studies suggest e-
retailers should not force customers to register before proceeding as an
account can automatically be created as part of the checkout process. The
details of which can be emailed to them highlighting the benefits of logging in
next time.

Also e-retailer must provide full view of order to the customer before
customer place the order. This will help customer to view the entire order
along with delivery time and if customer want to change any parameter, he
can change. Studies (Dedrik et al. (2001); Ernst & He (2000); Wong et
al.(2004); Stylianou et al. (2003); UNCTAD (2003);Efendioglu et al. (2004))
suggested that lack of payment facility and effective banking service are
barrier for the success of e-retiling. Saunders,C.(2004) suggested that adding
multiple ways for customers to pay for their purchase can make it easier to
close a sale.

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 Studies found that sellers who accept multiple payment, have more visitors
convert into customers than merchants who offer a single payment method.
For e-tailers who offer multiple payment options, their conversion rate grew
20 percent, to 72 percent of overall site visitors, compared to single-option
merchants, who convert an average of 60 percent of their shoppers.
TIMOFTE, C. (2004) also added that Merchants who support payment types
beyond credit cards (gift certificates, e-checks, etc.) typically see significant
increases in online sales. Offering potential customers additional payment
methods increases order conversion and in some cases order amounts.

The benefits of e-commerce using different payment methods are increasing

the sales and the number of customer, allowing capturing and keeping more
revenue, reduce the complexity of payment operations, and grow without
disruption.

2.5 Consumer Awareness

2.5.1 Definition of Awareness:

Awareness refers to the proportion of people who are aware of (i.e., have seen or
heard of) a product, brand name, company, or trademark. Awareness is subdivided
into Unaided Awareness and Total Awareness (including Aided Awareness).

Unaided Awareness refers to the proportion of people who are aware of (i.e., have
seen or heard of) a product, brand name, company, or trademark without prompting.

Aided Awareness refers to the proportion of people who are aware of (i.e., have
seen or heard of) a product, brand name, company, or trademark with prompting.

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 Total Awareness refers to the proportion of people who are aware of (i.e., have seen
or heard of) a product, brand name, company, or trademark. Total awareness
includes both unaided awareness as well as aided awareness.

2.5.2 Definition of Consumer Awareness

Consumer awareness refers to a buyer's knowledge of a particular product or

company, allows the buyer to get the most from what he buys. Consumers know
more about their choices when they have product information and benefit from
knowing their rights, hearing about alerts and warnings and finding out about safety
issues. Measuring consumer awareness requires more than just approaching a
consumer and asking, "Have you heard of our product?" It requires measuring sales,
tracking consumer preferences, and determining a show of interest for the product
or service.

Consumer awareness is broad, involving financial literacy, comparative shopping

techniques, money management and information about products. Basically,
consumer awareness is being able to look into factors, such as prices, product
attributes, warranties and store policies, before making a decision to purchase. An
informed consumer looks for the most value she can get from a product using
various buying methods, such as clubs, coupons, catalogs and online shopping.
Along with trying to save money, consumer should look for common consumer
scams, such as telemarketing fraud and phony Internet promotions.

Marketers spend a great deal of time and money attempting to make consumers
aware of their products and services, essentially creating a niche in the clutter of the
market. Creating awareness in the minds of the consumers is step one in the long
process of filling the sales pipeline. According to the Center for Economic Policy
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Research, ,internet played major role in increasing consumer, as customers can
provide and read consumer reviews, voice their complaints and opinions about
goods and services over website.

Each stage of awareness is one of the main pieces Eugene Schwartz discussed in his
book “Breakthrough Advertising”

Eugene gives the stages of Awareness in “Customers” as follows:

1. The most aware: Customer knows your product, knows what it does, and knows
he wants it.
2. Customer knows of your product, but doesn‟t yet want it
3. New Product: Customer knows or recognizes that they want what the product
does. But doesn‟t know that there is a product, yours, that will fulfill their want.
4. New products that Solve Needs: Customer has a need they want fulfilled but
isn‟t aware of the connection between their need and your product.
5. The customers are completely unaware about the market

Studied revealed that knowledge related to product/service will increase awareness

and awareness has direct impact on the behavior of individual. Companies usually
set a target for the degree of awareness they intend to achieve, and then plan a
promotional campaign to reach that target. Companies are using advertising, sales
promotion, publicity, personal selling, social media and other marketing activities to
increase awareness amongst potential customers.

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2.5.3 Methods to Measure Consumer Awareness

1. Sales Method

In this method, the awareness is measured based on volume of sales. The

company identifies increase of sales over a tracking period as advertising and
marketing tools are used to promote consumer awareness. For example the
company pays attention to increases in sales revenue after an advertisement
campaign or in-store sales promotion.

2. Show of Interest Method

In this method, the company will focus how many in-store, phone and mail
inquiries are made regarding your product or service. This cost effective
method is easy to track and provides a clear understanding of how well sales
and marketing tools move your product(s) out of the store.

3. Awareness/Preference Method

The company will determine consumer awareness based on how many

consumers show a preference for the product or service. In-store feedback
cards and product testing stations are an ideal way to implement this method.
In this method the company asks consumers to state their preference among
competitor products and explain why the selected product is superior.

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