Globally internet has changed the way in which businesses were performed traditionally. Developed countries have benefited from implementing e-commerce. But, in case of emerging economies like India the adoption of ecommerce has been very slow due to challenges posed by a number of barriers. In India, though the large corporations have adopted e-commerce and successfully explored the business opportunities, the small and medium enterprises are yet to benefit from adopting e-commerce. This paper reflects on the barriers that the small and medium enterprises face in India in process of adoption of ecommerce. It analyses both the external and internal factors that affect the adoption of e-commerce.

1. Barriers to Electronic Commerce Adoption in Small and Medium Enterprises in India
Abstract
Globally internet has changed the way in which businesses were performed traditionally.
Developed countries have benefited from implementing e-commerce. But, in case of emerging
economies like India the adoption of ecommerce has been very slow due to challenges posed by
a number of barriers. In India, though the large corporations have adopted e-commerce and
successfully explored the business opportunities, the small and medium enterprises are yet to
benefit from adopting e-commerce. This paper reflects on the barriers that the small and medium
enterprises face in India in process of adoption of ecommerce. It analyses both the external and
internal factors that affect the adoption of e-commerce.
1. Introduction
The number of internet users is steadily increasing in India. This provides immense
opportunity for growth of e-commerce [1]. Different factors like level of infrastructure
development, socioeconomic and socio-cultural aspects influence the level of adoption and
growth of e-commerce. E-commerce is identified as the key driver of development of business
and economy in developing countries including India [2]. Application of e-commerce has
brought about significant change in the traditional way of doing business [3]. In future e-
commerce is set to grow faster and the country would have to overcome the barriers in adopting
e-commerce. E commerce presents immense opportunities for businesses[4] in India by
providing cost efficiency, access to global markets[2] and distinctive strategic positioning
opportunity5
. In certain industries like IT, ITeS, digital products and service providers have
benefited the most from using e-commerce [6]. According to data obtained from Internet and

2. mobile association of India, the growth rate of Indian e-commerce market has been 550 percent
over the last half of the decade (iamai.in). But India has not maximized its benefits from e-
commerce yet. Adoption of e-commerce in India is still at the nascent stage. Though large
organizations have reaped the benefits of implementation of e-commerce, the penetration level of
e-commerce in the small and medium enterprises (SMEs) is very slow [7]. Lack of awareness
and knowledge is a significant hindrance in the process of adoption and application of e-
commerce [8]. If implemented effectively, SMEs can actually gain by capitalizing on the
opportunity to explore global markets and compete with large corporations in spite of having
limited resources. But there lies several barriers in the internal and external environment of the
organizations that creates barrier to electronic commerce adoption in small and medium
enterprises in India. This paper indentifies and evaluates the barriers, both internal and external
to the organization, which hinders the adoption and penetration of ecommerce among SMEs in
India. In the end it puts forward recommendations based on the analysis.
2. Literature review
2.1 Small and Medium Enterprises in India
There is no single definition for SMEs that can be accepted across all SMEs in different
industries. These firms widely vary in their size, employment, capitalization and revenue. So a
definition of SMEs in terms of these variables that fits well in one industry will show a mismatch
when applied to a different industry [9]. In India almost all major industries have prominent
presence of SMEs. They form the strategic backbone of the Indian economy.
With the introduction of Five Year Plans for economic development in 1951 and the
industrial policies thereafter, the government has identified the importance of the role that SMEs

3. play in the economic development of the country. According to Press Information Bureau,
Government of India, the annual compounded growth rate of SMEs from 2001-02 to 2006-07
has been 2.61 percent [23]. According to G M Ambhore, the director of the MSME
Development Institute, Mumbai, in total industrial production of India, SMEs contribute up to 45
percent [10]. 2.61 crore SMEs in India are major employment generators with 5.95 crore people
employed in the SME sector, as noted by G M Ambhore [10]. Family run businesses comprise
majority of the SMEs across different sectors and industries in India. The significant role of
SMEs is widely accepted by the government, policymakers, researchers and academicians.
With liberalization of the Indian economy in 1991, globalisation and the WTO regime,
the SMEs have undergone a transitional phase. SMEs presently face tough competition from the
multinational companies operating in their business sector. The recent global economic crisis of
2008-09 has also affected the SMEs in India. The businesses with strong technological base,
proactiveness in changing themselves and international outlook are most well prepared to emerge
successful in the increasingly competitive and dynamic business environment [9].
2.2 Current scenario of ecommerce adoption in India
The last decade has witnessed a technological revolution that involved penetration of
internet, and web technologies. In the dynamic business environment of today, development in
communication infrastructure and computer technologies has made commercial application of
internet an important part of the country’s economic infrastructure. Application of e-commerce
does not only benefit the companies, but also tremendously benefits the customers by providing
them with more choices, convenience of transactions both in terms of cost effectiveness and time
effectiveness. In business to customer transactions, increasing web developments and their

4. application, has allowed the companies to offer the best prices to their customers as it does not
require investing in and maintaining a brick and mortar store for the company. They can sell
their products out of their warehouse. This reduces the overall cost for the company and
companies pass on this savings to the customers as discounts. Moreover, the customers have the
convenience to buy products at the click of a mouse from the comfort of their home or office.
Customers benefit from online services like online banking, online ticketing for airlines, movies,
entertainment, railways, placing order online for home delivery of food from restaurants, online
hotel bookings, online facility for utility bill payments, purchasing apparels, books, and home
utilities over the internet, and so on [11]. E-commerce does not only facilitate the purchase
processes, but also provides opportunities for electronic advertising, electronic marketing, and
electronic customer support service.
Source: IAMAI
As per industry analysis the application of e-commerce across industries is only set to
increase. Commercialization of internet has been the driving force in developing e-commerce as
one of the most effective channels of transacting among businesses. The largest business to
business transaction portal of India, Tradeindia, maintained by Infocom Network Ltd, is of the
opinion that the growth rate of e-commerce in India is presently 30 to 40 percent [11]. The
market size of e-commerce in India was predicted to reach 46520 crore INR turnover in 2011,

5. according to IAMAI. SMEs in multimedia, entertainment and fashion industry are set to reap the
benefits of ecommerce the most in future [11]. Approximately around 1.6 million households
connected to the Internet Business to customer transactions is the major contributor to the
increasing e-commerce revenues. Travel industry is the highest contributor of revenues from e-
commerce followed by e-tailing (6 percent share) and financial services. Online classifieds and
digitals downloads contribute to 4.6 percent and 2 percent share respectively [11]. Increasing use
of smart phones will contribute to faster penetration of e-commerce. E-commerce has
transformed the way of doing business by providing SMEs with a level platform to compete with
the large companies on the internet space.
The primary factors behind the ecommerce boom in India are as below.
- Increase in internet users: According to data available from IAMAI, there was 38 percent
growth in internet users in 2011 and the total number of internet users presently stands at 121
million, which is merely 9 percent of the total population of the country [12].
- Growing middle class: The key to e-commerce growth in India is the growing middle
class which have increased disposable income to meet the increasing demand for goods and
services. The growth of middle class in India has been robust. Though the middle class has
income levels higher than the poverty level they continue to remain susceptible.
- Ease of payments: New and effective payment gateways have been the major contributor
in the meteoric growth of e-commerce in India. Multiple payment options like cash on delivery,

6. net banking alongside purchase on credit card has been an important contributor to the growth of
e-commerce. Cash on delivery has been widely accepted by the users as it protects the interests
of the customers [11].
3. Methodology
Methodology is simply known to be as the methods used for collecting and analysing
data in a research. This paper seeks to identify and analyse the barriers of e-commerce adoption
in small and medium enterprises in India. In order to fulfill the objectives, the secondary research
data collection methods are important and have significance. Secondary research data have been
used for our study. The secondary data is collected from the reports on e-commerce, textbooks,
journal articles, online resources, and browsing through several national and international
journals.
4. Barriers to e- commerce adoption in SMEs in India
4.1 External factors
4.1.1 Economic factors
The economic barriers pose a major hindrance in the adoption of e-commerce by SMEs.
Infrastructure factors: The primary requirements for e-commerce are electricity supply,
internet access and computer [12]. India faces lack of electricity supply in major parts of the
country. In many parts of the country people still use kerosene and fossil fuels for lighting. In
urban areas also the electricity supply is interrupted; thus hindering the growth of ecommerce.
Collusion: E-commerce may lead to collusive behavior in competition. Presently in the
business to business e-commerce many online market places have developed which are co-
owned by a few large companies.

7. Less attractive market segments: In India, traditional economic sectors like agriculture
still contributes substantially to the country’s economy. Applying e-commerce to these sectors is
less attractive as the profits from these sectors are meager. The cost advantage that a company
gains from e-commerce is only 2 percent from traditional industries as compared to the 40
percent in the electronics goods market.
Costs involved: Though the cost of installing internet and the continuous payments have
reduced over the last decade, it is still significantly high in terms of affordability by SMEs as
well as the customers. The ongoing costs and monthly internet charges are still high.
Inequality in income distribution: India has inequality in distribution of income across
different social segments. As a result, the large population of semi-urban and rural areas cannot
afford internet facilities. Moreover, there exists a dichotomy in the penetration and usage of
technology. In urban and semi-urban areas the SMEs have computer and internet facilities to
some extent but in SMEs in rural areas hardly have computers and adequate electricity supply.
Moreover due to low internet and e-commerce penetration levels, the companies adopting
e-commerce faces the problem of lack of economies of scale. This makes the option of adoption
of e-commerce less attractive and less profitable for businesses. Moreover the supply chain in the
country is poorly developed; thus affecting the business processes. Presently very few e-
commerce companies in India are generating sizable profits.
4.1.2 Political factors and Government intervention
An understanding of Government intervention is important for assessing the effectiveness
of operations of a company in a particular business segment. It is convenient to operate in a
segment where the government facilitates participation of different stakeholders, has pro-
business policies and regulations.

8. Lack of government intervention: To promote and support a business sector government
provides financial support directly or indirectly. For promoting e-commerce the government can
provide incentives in form of financial, technological and infrastructure support. But presently in
India the formal institutions that might support the growth of e-commerce are weak and they are
not effective enough in reducing the barriers in adoption of e-commerce [13]. Poor state of
telecommunication infrastructure, lack of telephone connections, low speed of internet, limited
bandwidth, and security concerns adds to the barriers in adoption of e-commerce. India faces
lack of promotion, education and policy development by the government to facilitate e-
commerce. Government intervention in ensuring telephone access and ISPs can increase the
access to e-commerce. The government can intervene to ensure open and competitive
telecommunication markets. Moreover, the government and regulatory processes in India are
time consuming and slow; thus delaying the business processes and adoption of ecommerce.
Market structure: The telecommunications market in India is not open, lacks free trade
and is very closely regulated. The import duties on computer peripherals and IT devices are also
very high. Reduction in import duties can reduce the cost of equipments and more number of
SMEs would be able to afford to develop business operations supporting e-commerce.
4.1.3 Legal aspects
Many researchers have found that legal barriers are a major hindrance in adoption of e-
commerce by SMEs in developing countries [13]. India is no exception to this. Lack of business
laws governing e-commerce, privacy and security issues, taxation issues, insufficient legal
protection for internet purchases and cyber crimes and jurisdiction are the major legal
impediments in the growth of e-commerce.

9. Taxation: Multiple taxes including VAT, service tax, Octroi, income tax along with their
exceptions and special clauses makes it confusing at times for the businesses to implement them.
Cyber act and the laws: In internet sphere, the related legal aspects pose challenges for
the existing legal system of the country. For instance, the information transferred electronically
or the purchases made electronically leads to contracts and issues like validity of the electronic
transaction, errors in online data entry etc. arising from such contracts cannot be adequately
explained by the existing provisions of the laws of the country.
Jurisdiction: Internet and e-commerce allows businesses to transact nationally as well as
internationally. So when disputes arise from such transactions they cannot be resolved applying
the laws of any one of the countries involved as different countries have different cyber laws. So
resolution requires global intervention.
4.1.4 Socio-cultural factors
The socio-cultural factors of a country play a crucial role in adoption of e-
commerce. This is because these factors impact the willingness and readiness of customers to
use e-commerce, which in turn influences the decision of businesses to set-up e-commerce
facilities. Some of the socio-cultural aspects are explained below.
Language and education: Language poses a barrier in access to information [14]. High
rate of illiteracy and low level of education makes it difficult for both businesses and consumers
to access information on the web. Majority of the website contents are in English. Though India
has sizable population of English speaking people, it is actually a very small percentage of total
population of the country. In SME sector majority of the business owners have low education
level. They lack the awareness of how quality of life and business income can boost by
application of technologies and e-commerce [2]. Lack of IT education is a reason for lack of

10. understanding of the potential value addition that technology and e-commerce can bring to the
business.
Risk aversion and cultural differences: In certain communities in India people prefer to
be risk averse [15]. This aspect can be explained by Hofstede’s cultural dimension of uncertainty
avoidance. In India, collectivism is preferred over individualism. This is another factor hindering
e-commerce adoption among Indian customers.
Cultural behavior: In India shopping is considered a recreational activity. The concept of
shopping is to first have a touch and feel of the product that the customer wants to buy. Face-to-
face contact, interpersonal relationship with the business owner or the employees and buying
goods physically from a brick and mortar store are cultural traits that influence Indian
consumer’s buying behavior. Transactions lack the personal contact when transactions take place
online [1]. Indian people (especially females) have tendency to bargain the products, which is not
feasible in Ecommerce. Indian consumers prefer face-to-face communication rather than
communicating over the chat or email when making a purchase. Moreover, people in India are
suspicious about technology [1]. They believe that technology can intervene with their culture
and ways of life. Increased interaction over the internet can reduce the understanding of
customers, and eliminate expression, criticisms and comments that are related to a purchase.
These factors affect the adoption of e-commerce.
Lack of trust among customers: an ecommerce business has to deliver the product, safe
and secure, in the hands of the right customer in right time frame. Regular postal service does not
offer an acceptable service level. Couriers have high charges and limited reach. These factors
affect the trust element of the customers on ecommerce.

11. 4.1.5 Cognitive factors
Cognitive factors refer to the mental maps of business owner of SMEs and their
customers. These factors significantly impact adoption of e-commerce especially in developing
countries like India. In India, lack of awareness and knowledge, lack of IT education, constrained
organizational resources including skilled human resources and technological resources, lack of
understanding of potential opportunities from e-commerce, preference to continue with status
quo, lack of confidence in service providers and risk aversive nature hinders adoption of e-
commerce [13].
Buying behavior of Indian customers: In India, shopping is considered as a social activity
with family and friend and involves personal interactions and relationship with the merchant.
People value long term relationships, social bonding and the spending quality time in developing
the relationship [1]. In India shopping is more need driven than impulse driven. People prefer to
buy things after seeing them physically. The customers exploring the online shopping options
does so by initially purchasing low value items in order to have a first-hand experience of the
process and develop confidence.
Risk as perceived by online shoppers: The penetration level of internet usage in India is
increasing fast but at the same time the cyber crimes are also increasing. Customers still perceive
that there are risks associated with online transactions, information theft and phishing attacks
[22]. Because of these factors a large number of internet users exit from the online shopping
process at the registration stage itself [1].
Business of thin margins: The goods and services sold online have thin margins [13].
Insurance requirements on high value goods shipped, increases the cost of the product. Again,
shipping cost of low value items is relatively high. Shipping costs are high due to wide

12. geographical area in which the customers are spread. So, though a business can increase its
market share through e-commerce, it is often difficult to achieve break even and earn higher
profits.
4.1.6 Technological factors
Poor technological infrastructure in India makes it difficult for the implementation and
penetration of ecommerce as it affects the readiness for adoption of e-commerce.
Personal computer penetration: Penetration of e-commerce is directly related to
personal computer penetration. Penetration of personal computer is affected by the high cost
of the equipments. This also varies across regions, due to inequality of income distribution,
education levels and lack of infrastructural support [14].
Infrastructure: The infrastructural barriers include the erratic power supply, lack of wide
availability of credit cards, limited bandwidth, lack of broadband facility, poor
telecommunications infrastructures, and limited access to technology. Speed of internet
connectivity and bandwidth of internet also plays an important role. The connectivity rate
through telecommunications is low, though the service providers are reducing their charges
[14].
4.1.7 Marketing issues
A wide range of marketing issues affect the adoption of ecommerce. These issues
include relevant content for the market, form of business, customer acquisition and loyalty,
logistics and fulfillment issues, and ethical issues [14].

13. Relevant content for the market: It is important for the consumers to understand the
marketing message mentioned on website. The language used and the simplicity of the
message influences e-commerce adoption [16]. India is a country where people speak various
languages. So the reach to a larger customer base, the businesses need to hire a professional
content developer to ensure the content is easily understandable and translating the content in
different languages.
Form of business: In India, as already discussed, there are several hindrances in the
business to customer transactions. In such situation, the business to business e-commerce can
be implemented in a relatively easier manner. Businesses can partner with their suppliers to
improve efficiency of business processes. But again business transactions operate on credit.
Lack of infrastructural facilities to support credit transactions hinders business to business
transactions.
Customer acquisition and loyalty: Due to lack of economies of scale, the cost of
acquisition of customers is high. Majority of the business of the ecommerce comes from high
rate of churning customers and the customer loyalty is low.
Logistics and fulfillment issues: Difficulty in address verification and increased risks of
fraud leads many e-commerce merchants turn down international orders. Also it is difficult to
predict customer demands, thus making it difficult for the merchant to manage inventory and
warehousing of goods.
Ethical issues: E-commerce gives rise to newer ethical issues that differ from the ethical
issues arising from traditional businesses [14]. E-commerce involves sharing of sensitive
information and various security threats. Developing of trust factor is important for the success

14. of e-commerce. Valuable information can be obtained and forwarded to the competitors. So
businesses need to decide on what information they want to share. Intellectual property rights
infringement can lead to ethical issues.
4.2 Internal factors
4.2.1 Top management
Support of top management is directly related to adoption of e-commerce by a company.
In SMEs, the decision making is centralized and the CEO, who is usually the owner of the
business, holds all powers of decision making [17]. Previous literatures have suggested that the
characteristics of the demographic factors and the personality of the CEO affect the willingness
to adopt new technology and be innovative [18]. Perception of and attitude toward IT adoption,
top management support, IT knowledge and experience are important factors affecting adoption
of e-commerce.
Perception of and attitude toward IT adoption: Positive attitude of top management
towards adopting of new and innovative technologies is the pre-requisite for successful adoption
of e-commerce. If the CEO perceives the benefits the company derives from adopting e-
commerce is more than that of the risks involved, it will result in adopting the new technology.
Top management support: The commitment of the top management in modernizing
business operations and processes plays a significant role in e-commerce adoption. The top
management support is measured in terms of the management’s level of involvement in
requirement analysis for e-commerce adoption, decision making, consultation with external
experts and direct monitoring of the process of implementation of e-commerce [18].
IT knowledge and experience: The IT knowledge and experience of the CEO reduces the
degree of uncertainty and perception of risk involved in adopting innovative modern technology

15. for the company. Lack of awareness of technology and low current level of information
technology application in the company hinders the adoption of e-commerce [2].
4.2.2 Enterprise resources
SMEs are characterized by limited resources in comparison to the large organizations.
The enterprise resources influencing the adoption of e-commerce are financial resource,
investment in technology and expertise in information technology.
Requirement of financial resources for investment in technology: Resource based theory
states that the financial resources have significant impact on the success of an organization [19].
SMEs in India are normally hard pressed for finances because of lack of financial support from
financial institutions and most of them receive financial support mainly from the owner’s own
personal finances. So due to limited finances for investing in technology infrastructure that might
reap benefits in the long run, owners of SMEs tend to refrain from making the capital
investment.
IT expertise: Moreover, most SMEs lack the IT expertise within the company. There is
inadequacy of IT knowledge in-house [18]. These factors negatively affect the adoption of e-
commerce. The internal expertise of information technology among the employees or the top
management is an important determinant of the process of adoption and success of e-commerce
implementation in an organization. In case of lack of in-house expertise the SMEs would require
to hire an external consultant and IT expert which will again involve further expenses to be borne
by the company.
4.2.3 End users
Even if the owners take the risk, make the initial investment and the e-commerce is
implemented, it is the employees who have to use that technology and contribute towards the

16. success of the new system. The competency and attitude of users and training requirements acts
as major hindrance in adoption of e-commerce.
Competency and attitude of users: The level of knowledge of computers and information
technology among the employees determines the level of competency within the company that
impacts the adoption process. Usually the existing employees of an SME lack the competency
because they are not the high end IT professionals whom large organizations can recruit easily at
a higher salary. Again, it is often noticed that the employees have a tendency to retain the status
quo and their willingness to adopt new ideas and technology is low.
Training requirements: As the SMEs cannot afford to recruit IT experts at higher salaries;
they need to train the existing employees to successfully adopt the new process. To derive
maximum benefit of the trainings, the employees should start using the technology before the
actual implementation, so that when the new system is actually implement the employees will
experience ease of using the technology [18].
4.2.4 Organizational characteristics
The characteristics of an organization that are important determinants in the process of
adoption of e-commerce includes organization structure and culture, readiness to change, family
intervention in decision making, nature of industry, business maturity.
Organization structure and culture: The size and structure of the organization is an
important determinant of adoption of e-commerce because the capability of capital investment
and human resource expertise is in proportion to the size of the organization [20]. The culture of
an organization is determined by attitude, perceptions, values and beliefs of the owner of the
company. So, as discussed earlier, these characteristics of the owner impacts the cultural
dimensions of openness to change, innovativeness, risk taking and uncertainty avoidance.

17. Readiness to change: Changes in industry characteristic and growth opportunities often
drive a company towards adoption of e-commerce. To accept the changing business environment
and implement new technologies, the readiness of the organization to adapt to the change is
important.
Family intervention in decision making: Majority of the SMEs in India are family run. In
such cases the top management of the company is small and comprises of the family member
who tend to hold the leadership position for longer time than non-family run businesses, have
lower level of education and professionalism, and monitors the company with the help of
informal controls and the organizational structures are more informal. So modernization and
keeping up with the latest technologies often takes a backseat.
Nature of industry: The industry sector to which a company belongs impacts adoption for
e-commerce. The importance of e-commerce adoption in different industries is significantly
different [18]. For instance, the requirement of e-commerce adoption in agriculture and
manufacturing sector is much lower than that in services and retail industry.
5. Recommendations
The recommendations based on the above analysis are as below.
5.1 Recommended strategies for SMEs in adoption of e-commerce
Recommendations to increase online customer base:
Increasing the online customer base is important requisite for SMEs to sustain their
online business and generate revenues. To increase the customer base to ensure higher volume of
online business through e-commerce and removing the socio-cultural and cognitive barriers, the

18. companies need to ensure that the products they offer the customers online adds value to the
customers. It is important for SMEs to build trust in their online relationship with the customers
and help customers develop confidence in e-commerce by providing the necessary assurance and
support in their purchase process. Excellent customer service and in-time delivery of goods in
top condition can motivate the customers to make further purchases online. Providing clear
information on the website in simple words and if possible including an option of multiple
regional languages will help the companies target larger customer base across different parts of
the country. Transparency of information about the product, price comparison, offering low cost
products and branded products are the other options to be taken up by the companies [21].
Recommendations to eliminate marketing issues:
The SMEs need to focus on development of logistics infrastructure to ensure smooth
procurement and delivery management. Inventory management and warehousing is difficult as it
is difficult for companies to predict the demand levels. To align the demand with the supply, the
companies need to integrate a system for automated updating of the inventory levels and setting
alerts for stock replenishment. Maintaining database is an important function of the back end
operations. Online marketing strategy need to be implemented in order to drive traffic to the
website and create demand for the company’s products and services. A strategic alliance with
the suppliers through business to business e-commerce can facilitate the efficiency of business
processes.
Recommendations for business management and owners:
It is often found that the business owners comprise the top management of the SMEs as
most of the SMEs in India are family run, rather than professionally managed. So the

19. management is hard pressed for time to devote in adopting and implementing e-commerce as
they have to single handedly manage all the operations and processes of the business.
Moreover due to limited resources they cannot afford to hire IT experts and more staff. So
developing a culture and practice of outsourcing the functions of development of e-commerce
to other SMEs specializing in information technology and e-commerce can prove to be cost
effective, time effective and ensure the quality of work within the limited financial resources.
5.2 Recommendations for actions to be taken by the Government
It is important for the government to intervene in the process of penetration of
telecommunications and accessibility of internet across the country to support the e-commerce
businesses. Developing strong regulatory bodies to oversee the e-commerce business would
benefit both the businesses and the customers as it would help safeguard the interests of the
parties involved [22]. Ensuring security of payments and privacy of online transactions is key to
the widespread acceptance and adoption of e-commerce. Improving the cyber crime acts and
adding new provisions in the existing laws to cover the online contracts and legalities would be
beneficial [21]. This is because the provisions of the existing laws are inadequate to cover the
issues arising out of e-commerce.
6. Conclusion and future of e-commerce
In summary, the paper analyses and evaluates the barriers in adoption of e-commerce by
SMEs in India. The paper evaluates both the internal and external factors that hinder the adoption
of e-commerce. SMEs in India lack the technological infrastructure like access to internet, lack
of government intervention and supporting regulations to facilitate e-commerce. Globally

20. internet and e-commerce has changed the traditional way of doing business. E-commerce has
tremendous potential for in store for SMEs to explore the newer opportunities in the market.
External factors that impact the adoption of e-commerce include economic, political, legal,
technological and socio-cultural factors, government intervention, cognitive factors and
marketing issues. The extent of the hindrance depends on the unavailability and inaccessibility of
infrastructure, lack of government intervention, lack of cyber crime laws, the education level,
cultural differences, logistics issues etc. Internal factors like top management support,
organizational resources, expertise of the end users and organizational characteristics have
significant impact on the adoption process of e-commerce. The success of internet adoption lies
in IT expertise of the employees of the organization, training, knowledge sharing, transforming
business structure and culture and top management’s involvement in process of adoption,
implementation and monitoring the process and functions of e-commerce [14]. The unawareness
and ignorance of benefits that a business can derive from implementation of e-commerce, makes
the business owners perceive adoption of new technology as taking up higher risks. If necessary
steps are taken by the government and the businesses to reduce these barriers, the SMEs can
benefit from the gaining larger target markets both domestically and globally. The SMEs would
be able to compete with larger companies by having the same platform and reach of customers
through internet and e-commerce.
India has a promising future in e-commerce. The rapid growth in the number of internet
users and the increasing middle class are the primary factors that are expected to fuel the growth
of e-commerce in India. In the age of globalization and dynamic business environment of 21st
century e-commerce is set to play a significant role in the success of SMEs because of the
opportunities that are going to come up in future. The businesses would need to scan the new

21. opportunities coming up in the business sphere continuously and adopt faster to the changing
economy in order to be successful in attaining the organization goals, gaining competitive
advantage and sustaining in the long run.
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