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Macro info of e commerce

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Macro info of e commerce

  1. 1. MACRO
  2. 2. History of Ecommerce One of the most popular activities on the Web is shopping. It has much allure in it —you can shop at your leisure, anytime, and in your pajamas. Literally anyone can have theirpages built to display their specific goods and services. History of ecommerce dates back to the invention of the very old notion of "sell andbuy", electricity, cables, computers, modems, and the Internet. Ecommerce became possiblein 1991 when the Internet was opened to commercial use. Since that date thousands ofbusinesses have taken up residence at web sites. At first, the term ecommerce meant the process of execution of commercialtransactions electronically with the help of the leading technologies such as Electronic DataInterchange (EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for usersto exchange business information and do electronic transactions. The ability to use thesetechnologies appeared in the late 1970s and allowed business companies and organizations tosend commercial documentation electronically. Although the Internet began to advance in popularity among the general public in1994, it took approximately four years to develop the security protocols (for example, HTTP)and DSL which allowed rapid access and a persistent connection to the Internet. In 2000 agreat number of business companies in the United States and Western Europe representedtheir services in the World Wide Web. At this time the meaning of the word ecommerce waschanged. People began to define the term ecommerce as the process of purchasing ofavailable goods and services over the Internet using secure connections and electronicpayment services. Although the dot-com collapse in 2000 led to unfortunate results and manyof ecommerce companies disappeared, the "brick and mortar" retailers recognized theadvantages of electronic commerce and began to add such capabilities to their web sites (e.g.,after the online grocery store Webvan came to ruin, two supermarket chains, Albertsons andSafeway, began to use ecommerce to enable their customers to buy groceries online). By theend of 2001, the largest form of ecommerce, Business-to-Business (B2B) model, had around$700 billion in transactions. According to all availabledata, ecommerce sales continuedto grow in the next few years and,by the end of 2007, ecommercesales accounted for 3.4 percent oftotal sales. Ecommerce has a greatdeal of advantages over "brickand mortar" stores and mail ordercatalogs. Consumers can easilysearch through a large database ofproducts and services. They can see actual prices, build an order over several days and emailit as a "wish list" hoping that someone will pay for their selected goods. Customers cancompare prices with a click of the mouse and buy the selected product at best prices.
  3. 3. Online vendors, in their turn, also get distinct advantages. The web and its searchengines provide a way to be found by customers without expensive advertising campaign.Even small online shops can reach global markets. Web technology also allows to trackcustomer preferences and to deliver individually-tailored marketing. History of ecommerce is unthinkable without Amazon and Ebay which wereamong the first Internet companies to allow electronic transactions. Thanks to theirfounders we now have a handsome ecommerce sector and enjoy the buying and sellingadvantages of the Internet. Currently there are 5 largest and most famous worldwideInternet retailers: Amazon, Dell, Staples, Office Depot and Hewlett Packard. Accordingto statistics, the most popular categories of products sold in the World Wide Web aremusic, books, computers, office supplies and other consumer electronics. Amazon.com, Inc. is one of the most famous ecommerce companies and is located inSeattle, Washington (USA). It was founded in 1994 by Jeff Bezos and was one of the firstAmerican ecommerce companies to sell products over the Internet. After the dot-comcollapse Amazon lost its position as a successful business model, however, in 2003 thecompany made its first annual profit which was the first step to the further development. At the outset Amazon.com was considered as an online bookstore, but in time itextended a variety of goods by adding electronics, software, DVDs, video games, music CDs,MP3s, apparel, footwear, health products, etc. The original name of the company wasCadabra.com, but shortly after it become popular in the Internet Bezos decided to rename hisbusiness "Amazon" after the worlds most voluminous river. In 1999 Jeff Bezos was entitledas the Person of the Year by Time Magazine in recognition of the companys success.Although the companys main headquarters is located in the USA, WA, Amazon has set upseparate websites in other economically developed countries such as the United Kingdom,Canada, France, Germany, Japan, and China. The company supports and operates retail websites for many famous businesses, including Marks & Spencer, Lacoste, the NBA, BebeStores, Target, etc. Amazon is one of the first ecommerce businessesto establish an affiliate marketing program, andnowadays the company gets about 40% of its sales fromaffiliates and third party sellers who list and sell goods on the website. In 2008 Amazon penetrated into the cinema and is currently sponsoring the film "TheStolen Child" with 20th Century Fox. According to the research conducted in 2008, the domain Amazon.com attractedabout 615 million customers every year. The most popular feature of the web site is thereview system, i.e. the ability for visitors to submit their reviews and rate any product on arating scale from one to five stars. Amazon.com is also well-known for its clear and user-friendly advanced search facility which enables visitors to search for keywords in the full textof many books in the database. One more company which has contributed much to the process of ecommercedevelopment is Dell Inc., an American company located in Texas, which stands third incomputer sales within the industry behind Hewlett-Packard and Acer.
  4. 4. Launched in 1994 as a static page, Dell.com has made rapid strides, and by the end of1997 was the first company to record a million dollars in online sales. The companys uniquestrategy of selling goods over the World Wide Web with no retail outlets and no middlemenhas been admired by a lot of customers and imitated by a great number of ecommercebusinesses. The key factor of Dells success is that Dell.com enables customers to choose andto control, i.e. visitors can browse the site and assemble PCs piece by piece choosing eachsingle component based on their budget and requirements. According to statistics,approximately half of the companys profit comes from the web site. In 2007, Fortune magazine ranked Dell as the 34th-largest company in the Fortune500 list and 8th on its annual Top 20 list of the most successful and admired companies in theUSA in recognition of the companys business model. History of ecommerce is a history of a new, virtual world which is evolving accordingto the customer advantage. It is a world which we are all building together brick by brick,laying a secure foundation for the future generations.
  5. 5. Start of online shopping: Amazon.com is a Fortune 500 e-commerce company based inSeattle, WA. Amazon was one of the first big companies to sell goodsover the Internet . The company was founded by Jeff Bezos in 1994,and launched in 1995. They started out as an online bookstore andthen quickly diversified by adding other items, such as VHS tapes andDVDs, music CDs, software , video games, electronics, MP3s,clothing, furniture, toys and even food items. In 1999 Time Magazine named Bezos its 1999 Person of the Year. This was largely inrecognition of the companys success in popularizing online shopping.Ecommerce Today:- Ecommerce today is a remarkable experience. It has transformed traditional shoppingbeyond recognition. It is so much better than any other way of shopping that it has alreadyattracted a great many of ecommerce-lovers. If some years ago ecommerce was a buzz word, now it has become the order of theday. People seem to shop literally everywhere – at their workplaces during lunch times, inrush hour when there is nothing else to do but switch on their laptops and start surfing. Ecommerce today gained so much popularity because its underlying technologies areevolving at giant steps. We are even offered to ―feel‖ the product with a 3D mouse to betterunderstand its shape, size and texture. Why go somewhere out when all you have to do ismake an order, choose the shipping method, put up your feet and wait till the order isdelivered right to your door-step? Ecommerce today offers so much luxury that even conventional stores have alreadysignaled the alarm. Although, every one agrees that it is a long way for an ecommerce toreplace ―brick-and-mortar‖ stores, it has every chance to happen in the future. Ecommercewhich we are witnessing today brings in so much adventure into our lives that it is enjoyed bythe whole online community. Ecommerce today does have some drawbacks but they say ―he that fears every bushmust never go a birding‖. A lot of consumers do put up with minuses since they trust theonline world and want it to be a better place. Ecommerce today reflects what we created at the very dawn of online electroniccommerce. It is made by us and meant for u
  6. 6. Future of Ecommerce:- Experts predict a promising and glorious future of ecommerce in the 21st century. Inthe foreseeable future ecommerce will further confirm itself a major tool of sale. Successfulecommerce will become a notion absolutely inseparable from the web, because e-shopping isbecoming more and more popular and natural. At the same time severe rivalry in the sphereof ecommerce services will intensify their development. Thus prevailing future trends ofecommerce will be the growth of Internet sales and evolution. Each year number of ecommerce deals grows enormously. Sales volumes of on-linestores are more than comparable with those of ―brick-and-mortar‖ ones. And the tendencywill continue, because a lot of people are ―imprisoned‖ by work and household duties, whileInternet saves a lot of time and gives opportunity to choose goods at the best prices. Present-day Internet sales boom is the foundation for magnificent ecommerce future. The ―quantity to quality‖ tendency of ecommerce is also becoming more and moreobvious, as the Internet has excluded geographical factor from the sale. So it doesn’t matterany more whether your store is situated in New York or London or in a small town. Tosurvive, merchants will have to adapt rapidly to the new conditions. To attract morecustomers e-store-owners will have not only to increase the number of available services, butto pay more attention to such elements like attractive design, user-friendliness, appealinggoods presentation, they will have to opportunely employ modern technologies for theirbusinesses to become parts of ecommerce future. Of course, those, who acquire e-stores earlier, get better chance for future success andprosperity, though an ecommerce site itself doesn’t guarantee you anything. Only anappropriate ecommerce solution in combination with thorough emarketing and advertisingcan buy you business insurance.
  7. 7. In India to compare with the total population, around 2.5 crores are the internet users. Themost of the study found that, most of the shoppers access the internet from office, followedby those who access it from home. Some also go to cyber cafes. The business module is costeffective, easily accessible and profitable in many functional areas. Consumers and retailersboth desire a safe, simple and complete online shopping. From this we can findout what is theactual and real power of internet now a days.According to the Preti Desai, President, Internet and Online Association of India "E-commerce is coming of age in India. Chaining lifestyles and shopping habits" Now a daysmost of the metro and non metro corporation cities are basing completely on the media andinternet and multiple internet access points.As per the survey reports, of Internet and online association of India, the total value of e-commerce activities within India crossed Rs.570 crore during 2004-05. On the basis of that,the present and the next couple of years it may be crossed to Rs.2,300crore worth of e-business in India. In India most of internet users are purchasing their commodities andservices through online shopping through internet and e-business.As per the reports, out of 3099 online shoppers, the average of 55% i.e., 1,716 shoppers arebenefiting for online services, that are getting services through online and use of internet byway of e-commerce. The rapid development of E-commerce in India is forcing companies toadopt business strategies revolving around the internet. As per the Chairman of IOAL "Thereport reflects the chaning face of business trends in India. Today, the internet population is25+ million and is expected to grow at 100 million by end of 2008" So on the basis ofreports, we can imagine how the India is growing with online shopping and e-commerce.India is the second most populous country and the largest democracy in the world. Now Indiahas improved its position to the 43rd rank in the World of E-Commerce activities. The rapiddevelopment of e-commerce is forcing companies today to adopt business strategies rotatingaround the internet.Finance Minister of India Mr.P.Chidambaram announced recently that expected growth rateof Indian economy is 9 % for the year 2008 and that is excellent by any means.Thoughimpact of Indian economy growth may not be considerable on world scale but atleast allIndians will be very very happy.
  8. 8. Online shopping is the buzz, the sensation in the current scenario. Getting anything by a clickof the mouse right from fashion accessories to jewellery, apparel, electronic items, crockery,home appliances, personal care products, and more has led to the popularity of the onlineshopping mall phenomenon. It is the easiest and fastest way of shopping. At an onlineshopping mall, you can catch a glimpse of new product releases, combo deals, packages,discount offers, seasonal products, etc. and accordingly grab the best deal. Time is not theconstraint; you can shop anytime - the facility is available round the clock. Besides savingyour time of visiting an offline store and staying away from the hassles involved, you cangain an additional advantage, i.e., saving a lot on the money factor.Another plus point of online shopping is that you can compare products in terms of brands,specifications, features and prices and buy the right ones. It is discount shopping that attractscustomers to shop online. There are a number of shopping platforms. Focus on one particularportal that provides complete products and offers the best deals. Get yourself registered toavail various benefits. For example, you can feed in your contact details so that you need notenter the same every time you shop. With every purchase, you earn redeem points. Many anonline shopping mall offers special/combo deals and great discount offers. There are countedfew platforms that facilitate group bargaining, helping buyers collectively avail maximumdiscounts in addition to enjoying voice video text chat, meeting new shoppers, earningredeem coins, winning prizes, and more.The scope of discount shopping is not only limited to one particular section. Many an Internetliterate individual encompassing the young and the old alike of both the sexes prefer onlineshopping. For the same you need to have a bank account. You can use your credit card ordebit card to buy the desired products. Most online platforms provide payment facilities in allavailable modes right from Internet banking, paying by cash, paying cash at the time ofdelivery, etc.At a shopping mall, you can explore similar products representing some of the biggest brandsat the national and international level. If you are fortunate, you can avail discounts over morethan fifty per cent. You can always find something new and interesting. So shop online andstay benefited!
  9. 9. Apparel, footwear and accessories focused ecommerce venture, Myntra.com has raised $21 million,in a fresh funding round led by Tiger Global. The news of the funding was first reported by Pluggd.in.According to MukeshBansal, CEO of Myntra, the company intends to use the funding to investfurther in its technology platform, for improving the brand, and to invest in supply chain to buildcapacity for future growth. He said that the company is also expanding its team and hiring across theboard. With this funding round, the company has raised a total of $40 million since its inception,from investors such as Tiger Global, IndoUS, IDG and Accel Partners.Traffic, customer base and Avg transaction size: In terms of traffic, the site claims to receive about200,000 daily visitors, and a user base of 2 million customers. On sales conversion, i.e the number ofvisitors who actually convert into shoppers, Bansal told MediaNama that it was roughly in mid-singledigit ranging between 3%-4%. He did not comment on the cart to order conversion percentage butinformed that the average cart size in terms of value is Rs 1400 and majority of transactions werebetween Rs 500 to Rs 3000. However when we asked the number of monthly orders, Bansal saidthat it was close to 80,000 to 90,000, with half of the orders being placed by new and the other halfby repeat customers.Sales across geographies:Bansal informs that about 50% of all orders are from top-10 cities whilethe rest are from tier-2 and 3 cities. He said that during the last 6 months, tier-2 and 3 cities havegrown at a good rate due to improvements in distribution, since, a lot of brands were not availablein these regions. The company offers Cash on Delivery to 4,000 pin codes out of the 10,000 pin codeswhich it delivers to.Sales across categories: In terms of categories, 90% of the total sales is from the apparel andfootwear segment, while the remaining 10% is contributed by accessories. The leading segments interms of sale are sports wear, casual wear and ethnic wear. These are also the segments withextensive catalogues, he adds. The company is now working on building up its formal wearcatalogue.Impact of tv campaign:Myntra had run a big tv campaign. We asked Bansal about its impact, towhich he responded that the company got a huge lift in brand perception and awareness and itsefficiency for online marketing also increased substantially. He added that it helped in getting newbrands on board, and instead of putting efforts in brand acquisition, the company was beingapproached by brands. Myntra’s catalogue is spread across 200 brands. He informs that customeracquisition cost has declined by almost 50% after the campaign.Warehouses & Logistics: The company has its own warehouse in Bangalore and intends to set-up 3more warehouses including ones in Delhi and Mumbai in the next 6 months. The company is alreadyhandeling logistics on its own in Delhi, Mumbai and Bangalore.Myntra is aiming at revenues of Rs 500 crore in FY12-13, but is that a realistic target?: According toBansal, the category offers a lot more growth. ” To get Rs 500 crore we just need a million activecustomers and at the moment we have 10 million ecommerce customers. There’s enough headroomand the user base will grow from 10 million to 15 million in the next two years, ” said Bansal. Headded that the company plans to achieve this growth by expanding its catalogue, improving
  10. 10. distribution, and acquiring more customers. He said that success in the category was mostly aboutbuilding the right customer experience.On the entry of Amazon:Bansal said that he did not consider Junglee.com a threat, since it was moreof a price comparison service. He said that Myntra was approached by Amazon to join the service, towhich it declined.On expanding into new segments: The company intends to remain focused on fashion and lifestyleand would at best look at affiliated sub categories within the segment. Also, Myntra does not plan tooffer deals or flash sales and is happy with the current season pricing model.I just spoke to MukeshBansal, CEO of Myntra, who told me that the company intends toexpand first to Mumbai, Pune, Hyderabad and Chennai. They currently have offices inBangalore and Noida, and will be setting up mostly sales and marketing offices in a new cityevery 3-6 months. They’re in expansion mode for 2 years, and expect this round of funding totake them to break even by the next financial year, and last them around 2.5 years. Myntraalso intends to expand their team from a current size of 50 people to 100 by June 2008.I was wondering why they’d need to expand offline – ideally, an online merchandisingbusiness should be operating primarily online, with a small team, and leveraging distribution.Bansal said that they don’t look at it at just an online business – there’s a fair amount ofsupply chain management, which needs to be automated and scaled. Myntra works with over20 vendors, and will also have to invest in setting up their own operations for new productsthat they intend to bring into the market – including sports and fashion accessories.Myntra currently claims to have a client base of over 150 companies and over 50 colleges.Their business has two segments – Individuals, which account for 1/3rd of the revenues (andaffiliates and parters account for 1/3rd of that), and Institutions, which account for 2/3rd. Afew months ago, they crossed around $1 million (Rs. 4-5 crores), and are growing 10-30percent every month. The raw material costs are high, so I asked Bansal about their EBITDAmargins – he declined to comment, but said their gross margins range from 25-60 percent,depending on the product.
  11. 11. Online service of videotext, Minitel was launched in France in 1982 and was accessed usingtelephone lines, similar model failed in UK. It was a real success till WorldWideWeb.The researchers who were working on Videotex in US with services like ―The Source‖ and―CompuServe‖ in 1979 (contemporary of UK based research: BBC with Prestel,BritisTelecom with Viewdata, ITV with ORACLE) got interested in creating a solution forcustomer-targeted payment processing whose target audience would be the softwaredevelopers and shareware authors, they created Swreg in 1987 in US, thus enabling the firstOnline market for the developers community.In 1990 Tim Berners-Lee a British scientist working at CERN laboratory wrote the first webbrowser WWW which then changed most research processes and ways of businesses seeing awhole new market to evolve (rather a whole new world ―The web world‖).People saw new technologies evolving with new market and then around 1994 a companycalled Netscape released a browser, enabling anyone to type a name in the Navigator browserand visit a webpage (which might look dumb right now, but was a real exploration makingthem the real champs of the market and even challenging market leaders).Soaring stockprices, Pizza Hut taking orders online and a wide variety of products being available online.Then transactions and business started happening over the web urging every company to havea ―.com‖. To address security issues Netscape 1.0 introduced SSL encryption, for securetransaction. Online retailer ―Amazon.com‖ launched selling each and everything online. ―E-bay‖ the online auction house founded by computer programmer Pierre Omidyar. [Yipeeeverything on internet]United States postal service goes online, Acquisitions of majors overtaking smaller ones fortechnological advancement; the whole environment was so ―technologically charged‖. Thiswent on till the year 2000 when finally the Bubble (The Dot Com bubble) burst with recordhigh in stock prices.When money was involved in doing business over the internet ―PayPal‖ was launched andpractically has share of 70% till date, it provides facility for online payment.Aggressiveness in the market especially in the online shopping market giving way to newtricks like giving out Coupons for customer loyalty and in an attempt to keeps clientsreverting back major benefits are being offered with decent discounts to promote onlineshopping.
  12. 12. Amazing, e-commerce is huge in India!A report by the Internet and Mobile Association of India hasrevealed that India’a E-commerce market is growing at an average rate of 70 percent annually and has grown over500 percent since 2007.The current estimate of US$ 6.79 billion for year 2010 is way ahead of the market size in theyear 2007 at $1.75 billion. The following chart depicts the growth of E-commerce in India inthe last couple of years:Apparently, more online users in India are willing to make purchases through the Internet.Overall e-commerce industry is poised to experience a high growth in the next couple ofyears. The 70 percent year on year growth is expected to continue and India’s e-commercemarket is forecast to reach a whopping $US 10 billion by the end of 2011.The e-commercemarket in India was largely dominated by the online travel industry with 80% market sharewhile electronic retail (E-Tailing) held second spot with 6.48% market share.
  13. 13. E-Tailing and digital downloads are expected to grow at a faster rate, while online travel willcontinue to rule the major proportion of market share. Due to increased e-commerceinitiatives and awareness by brands, e-Tailing has experienced decent growth. As far asdigital mobile downloads are concerned, the increasing use of smart phones, availability of3G services and cheap data plans will also boost the growth process While e-commerce rises,there is a need to place one eye on cyber crimes and scams in India.

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