E-commerce in India has grown rapidly in recent years and is expected to continue growing. Online retail revenues grew from $3.3 billion in 2009 to $6.3 billion in 2011 and are projected to reach $12 billion by 2015, catching up to the size of the online travel market. Factors driving growth include India's growing internet and smartphone usage, lower prices, and increasing comfort with online shopping among Indian consumers and businesses. However, e-commerce also faces challenges around logistics, payments, cybercrime, and expanding usage beyond major cities and among non-English speakers. Investments are helping companies address these challenges as they pursue India's large market potential.

1. E-COMMERCE IN INDIA:
Evolution, Growth and Challenges
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2. contents
Table of
01 | Executive summary 04
MSLGROUP India
MSLGROUP India is the nation’s largest PR and social media network. Made up of three agencies, 02 | E-commerce Categories 06
HANMER MSL, 20:20 MSL and 2020Social, MSLGROUP India combined includes 15 offices, 565 staff • B2B
and an activation network reaching an additional 125 Indian cities. With a proven track record of servicing  • B2C
multinational and Indian corporations since 1989 and 40 senior counselors with 15 or more years of  • C2C
strategic communications experience, clients, colleagues and business partners benefit from
 • C2B
MSLGROUP India’s breadth and depth of experience and insights.
03 | Growth of e-commerce in India 08
MSLGROUP Asia 04 | Sectors 12
For 23 years, MSLGROUP’s Asia team has counseled global, regional and local clients, helping them  • Travel
establish, protect and expand their businesses and brands across this fast-growing region. Today, • Automobiles
MSLGROUP has the largest PR, social media and events teams in Greater China (16 offices and 1,000 • Financial services
colleagues) and India (15 offices and 575 colleagues) and is actively working to lead the development of
 • Stock trading
the industry with the regular publication of whitepapers/reports and innovative Learning & People
Development programs to nurture talent. The MSLGROUP Asia team includes 38 owned offices and • Real estate 
1,675 colleagues in Beijing, Shanghai, Guangzhou, Chengdu, Hong Kong, Macau, Taipei, Tokyo, Seoul,  • Gifts
Singapore, Kuala Lumpur, Mumbai, Delhi, Ahmedabad, Pune, Bangalore, Chennai, Hyderabad and  • Matrimony
Kolkata. An activation network of colleagues reaches an additional 125 Indian and 100 Chinese cities and  • Job search
a strong affiliate partner network adds another 23 Asian cities to our reach. MSLGROUP Asia was  • Online retailing
awarded Campaign Asia Pacific’s Network of the Year, 2011 and MSLGROUP Asia’s teams have also been  • Online ads
recognized as leaders by multiple industry groups, including most recently Hanmer MSL India (‘PR
Agency of the Year 2011’ by PRCAI), Luminous (‘Local Hero/Agency of the Year 2010’ by Marketing Events 05 | Opportunities 16
Asia), Genedigi Group China (‘Innovative China SMEs’ by Forbes China), ICL MSL Taiwan (‘Agency of the  • Global trade
Year 2011’ by Taiwan Advertiser Associate), and won more than 50 awards in the last two years. Learn  • Virtual businesses
more about us at: asia.mslgroup.com+ Twitter + Facebook
 • Lower search costs
 • The rise of facilitators
MSLGROUP 06 | Challenges 18
MSLGROUP is Publicis Groupe’s strategic communications and engagement group, advisors in all  • Payments
aspects of communication strategy: from consumer PR to financial communications, from public affairs  • Logistics
to reputation management and from crisis communications to experiential marketing and events. With  • Cyber crime
more than 3,500 people across close to 100 offices worldwide, MSLGROUP is also the largest PR
network in fast-growing China and India. The group offers strategic planning and counsel, insight-guided
07 | 10 years from now: 20
thinking and big, compelling ideas – followed by thorough execution. Learn more about us at:
www.mslgroup.com + http://blog.mslgroup.com + Twitter+ YouTube. E-commerce is dead, long live e-commerce
08 | The e-commerce evolution 22
Publicis Groupe
09 | India and the internet 23
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3. Executive Summary
A study by Avendus Capital - a products, raised $150 million
financial services firm - said that from Accel Partners and Tiger
Indian e-commerce revenues
grew to $6.3 billion in 2011, from
Global Management, putting its
valuation at $850 million.
Composition of internet audience
$4.3 billion in 2010 and $3.3
billion in 2009. The study While the opportunities are
estimated that online retailing myriad, so are the challenges. 45% INDIA
would catch up with online travel Foremost among them is finding ASIA-PACIFIC
a way to grow the customer base. 40%
by 2015, each contributing $12 WORLDWIDE
billion in revenues. What is needed, said industry
sources, is a quantum leap - 35%
K Vaitheeswaran, founder of getting at least 25% of internet
Indiaplaza.com, India’s oldest users to start transacting online 30%
online retailer, told ‘China Daily’: from the present 6%-8%
25%
“In 1999-2000, only 3 million (E-commerce, excluding travel).
people used the internet and out 20%
of that, only about 15,000 to Logistics – timely deliveries,
20,000 users were shopping ensuring against damage during
shipments, return of products 15%
online. Today that 3 million has
grown to over 100 million. More and reversal of faulty
transactions – are a problem too, 10%
importantly, those 20,000
online buyers have grown to as is the poor bandwidth and
5%
over 14 million.” unreliable internet connections.
English is the dominant language 0%
The benefits are clear to 15-24 25-34 35-44 45-54 55+
consumers – convenience, lower of e-commerce, but only 35%
(estimated) of the population years years years years years
prices and price comparisons. As
Pankaj Jain, consultant at Tlabs speaks it. As the internet adapts
and lead organiser at Startup and assimilates different Source: Comscore State of the Internet With a Focus on India (2011)
Weekend said: “Customer languages, the industry will have
In the second half of 2011, as online shopping retailer, to the service is the key. If you can to follow suit to ensure its
India’s 100 millionth internet ‘China Daily’ (April 20, 2012), an build a customer-centric e- customer base expands.
user logged on and the number English language newspaper. commerce company in India that Besides, the problematic supply
of mobile phone users crossed provides a Zappos-like chains could be a deal-breaker.
Growth of online population
600 million, it became clear He claimed that Myntra.com
experience, you will have a
that the foundation for an e- was doubling its revenue every The sizeable investments,
major edge over other e-
commerce revolution had been four to five months, which was however, are allowing Indian
commerce businesses.”
laid. the trend across the industry. firms to build delivery channels
The rise of smartphones, secure and devise payment systems.
The internet is already Ravi Srinivasan, veteran
transaction gateways, banks Cash on delivery, for instance, is 13%
changing the way connected business journalist, said: “E-
going online with a vengeance the preferred payment option in 19%
Indians shop. Not only has it commerce is a force multiplier
and the easy issue of credit and India and will remain so until
opened up a new world of lower for retail. Whatever retail does
debit cards have aided e- consumers feel secure about
prices and choices, it has also for the economy, e-commerce
commerce. parting with their credit card MARCH
emerged as a wealth-creating improves and enhances. The
primary advantages are All this has attracted investors in numbers online. All leading 2010-2011
tool for entrepreneurs. players have introduced this
reducing the cost of a big way; in 2011, the sector
Given the size of the Indian intermediation, enhancing received investments of more option. 20%
market and growing consumer information and than $1 billion. The industry is now betting on
consumerism, industry sources choice and ‘democratising’ 18%
In January 2011, Snapdeal.com, India’s young consumers – more
aren’t surprised that e- retail. All of these would go than half the population is under
commerce companies are towards increasing choice and an online deal shop, raised $12
million and another $40 million 25 years of age and more than
reporting double-digit growth. lowering cost for consumer.” 65% under 35 years – to push INDIA
“Most e-commerce ventures, at a valuation of $100 million six
Online ticketing and banking months later. Meanwhile, online growth. CHINA
particularly online retail, are
experiencing phenomenal services are already popular, but retailers Fashionandyou.com Understanding consumer RUSSIAN FEDERATION
growth with online transactions Indians are only just dipping and Myntra.com raised $40 behaviour and building online BRAZIL
growing by leaps and bounds their feet in the e-commerce million each. brands will be the key. How will
every month,” said Mukesh pool. Slowly, the comfort level Indian e-commerce firms adapt?
is extending to other products Flipkart, the books retailer which Source: Comscore State of the Internet With a Focus on India (2011)
Bansal, CEO and founder of has now diversified into various The next decade will tell.
Myntra.com, a Bangalore-based and services.
04 05

4. E-commerce categories
promote investment, trade
Business-to- stocks and forge financial
Consumer-to-
Business (B2B) alliances. Consumer (C2C)
Originally coined to describe C2C commerce is the oldest
electronic communication Business-to- form of trade and has existed
between businesses or long before the web. However,
enterprises, Business-to- Consumer (B2C) global connectivity has given it
Business or B2B is now a different dimension.
Simply put, B2C transactions
commonly used to describe all
are direct dealings between Such transactions are yet to
products and services used by
businesses and consumers. A make a significant impact on
enterprises. Business-to-
relatively new category, B2C web-based commerce. Auction
Business covers the entire
started gaining momentum in sites are one example of such
gamut of e-commerce that can
the late 1990s when the internet business. When individuals
occur between two
became more accessible. This have to sell goods, they list
organisations.
category includes everything, them on auction sites where
Transactions between industrial from information searches and others can bid. This transaction
manufacturers, partners and electronic shopping to involves consumer-to-
retailers, or between interactive games delivered consumer interface. These may
companies, primarily fall into online. or may not involve a third-party
this category. like in the case of the auction-
Some share of e-commerce
exchange eBay.
B2B activities include revenues is generated from B2C
purchasing and procurement, transactions. One of the biggest challenges
supplier management, that C2C faces is lack of trust.
With a huge number of travel
inventory management, The lack of a reference point
portals, railways and airlines
channel management, sales makes it difficult for buyers to
have played a significant role in
activities, payment feel confident about the people
e-commerce transactions in
management, and service and they are dealing with. Both
India. Recently,
support. Tradeindia.com, India’s buyer and seller are unsure of
Makemytrip.com registered a
largest B2B portal, maintained the quality of goods, credibility
turnover of Rs 1,000 crore
by Infocom Network Ltd, and payments.
($200 million). In 2007-08,
observed that e-commerce
travel alone constituted 50% of
transactions in India show a
Rs 4,800 crore ($960 million)
growth rate of 30% to 40% and
online market.
Consumer-to-
will soon reach the $100 billion
mark. In the last few years online Business (C2B)
services like banking, bill
International brands are keen to In this business model, it is
payment, ticketing, hotel room
make the most of the growing consumers who offer products
booking, matrimonial sites and
Indian market and are relying on and services to companies. In
job sites are getting increasingly
the web to exploit the customer India, C2B is at an early stage.
popular. With the stock
base. Tradeindia.com, C2B connects a large audience
exchange, too, coming online,
Matexnet.com, to a bi-directional network
there has been a tremendous
AuctionIndia.com, through the internet. The
boost in the online business.
Indiamart.com, accessibility of the web and
TeaAuction.com, However, B2C still has a long technologies like digital
MetalJunction.com, Chemdex, way to go to be on par with B2B printing, high-performance
Fastparts and FreeMarkets are in India. This is mainly because computers and powerful
some of the leading B2B B2B transactions are of much software are leading people to
exchanges. greater value than B2C. take this medium seriously.
Over the years, the scope of
B2B transactions has
broadened. Moving on from
sales, corporations are now
using B2B communications to
06 07

5. Growth of e-commerce
in India
a business model, it appeals to million people online using
the ‘value-minded’ Indian services through mobiles,
mindset, which is about getting tablets, handhelds or personal E-commerce in india
the best value for money computers. It’s all merging, and
spent,” said Nelson D’Souza, it’s happening very fast.”
general manager, 10,000
Fundsupermart.com, one of The Internet and Mobile
Asia’s largest distributor of Association of India (IMAI) 6,790
mutual funds online. “Around estimated that India’s e-
the world, e-commerce has commerce market is growing 4,230
brought in ‘bargain hunting’, 70% every year; 500% since 3,015
which is common to middle- 2007. In 2010, it was estimated 1,750
classes around the world. The at $6.79 billion, dwarfing its 31.38 103.84
success of Flipkart and 2007 value of $1.75 billion. By
Snapdeal shows that e- the end of 2011, the e- 1998-99 1999-00 2007-08 2008-09 2009-10 2010-11 2011-12
commerce market is expected (projected)
commerce is here to stay.”
to have hit $10 billion.
At present, travel leads the
pack among e-commerce While it is expected that travel TRANSACTIONS (IN $ MILLION)
segments, flourishing on the will remain the dominant sector,
back of growing disposable e-tailing and digital downloads
incomes and an internet-savvy will probably grow at a faster Source: ‘Indian Ecommerce Report’ by Internet and Mobile Association of India and IMRB
urban population. However, rate.
other segments such as retail, Home Internet usage in India
classifieds, jobs, matrimonials grew 19% between April 2006
and downloads are doing well and April 2007, when it reached
too. 30.32 million users. By the end
of 2011, there were an Market share in 2010
Mobile commerce, which is
only just being introduced in estimated 100 million Internet
India following the boom in users. With a middle class of
telephony, could prove to be a nearly 300 million, these Other services Downloads
stable complement e- numbers can only grow. 5.09% 2.12%
commerce. “The future is certainly going to Financial services
show an upward trajectory – 6.31%
Mehul Patel, a serial
entrepreneur who founded competition will heat up, more E-tailing
KIPL, a new media consultancy, players will come in and then 6.48%
and Mozomo, a mobile there will be a consolidation in
commerce consultancy, the market,” said Amrit Ahuja,
believes that the shift is already vice-president, 20:20 MSL. “A
happening. His definition of new breed of aggregators will
‘mobile commerce’ includes arise for customers to visualise
iPads and tablets, apart from the multiple deals available;
cellphones. “There are more expect a new business model
E-commerce in India is still advances in technology, too.”
nascent, but it is important for growing adoption of computers, and more Android, iOS and
developing countries like India. introduction of 3G and falling Blackberry apps today in India
The opportunities for e- net access costs. than ever before. Most of our Online travel
clients now have a dedicated 80%
commerce players are many –
rapid urbanisation and rising “E-commerce is probably the smart apps budget,” he said. “I
literacy rates, rapidly growing best thing that has happened to am highly optimistic that by
the Indian middle-class and 2015 we will have close to 400 Source: Comscore State of the Internet With a Focus on India (2011)
internet user population,
emerging small businesses. As
08 09

6. It’s clear that from the data that a range of products and Besides, India is on a growth
market share is moving towards services – from movie tickets path, accelerating
India and especially China. and flowers to electronics and consumerism. Growth will aid
China’s share of regional B2C e- insurance. With stock the rise of e-commerce, which
commerce will grow from 4.1% exchanges coming online, e- in turn will spur more
in 2006 to 14.3% by 2011. Here, commerce has arrived in India. commerce.
too, travel will be the largest
category. However, the business
landscape is not without
“The Chinese are way ahead on challenges. Credit cards are not
the e-commerce front. The ubiquitous and the payment
massive success of local sites challenges are myriad.
such as Alibaba reverberate the Logistics, especially in the case
growth story for e-commerce in of deliveries to consumers, are
China. E-commerce businesses a problem.
have managed over 10% of the
GDP in some countries. India These problems are being
has a lot to catch up on. In 10 resolved. While the delivery
years, we will be probably where system – via courier and post –
China and the world are today,” has improved, modern
said Fundsupermart’s D’Souza. technology like secured socket
layer (SSL) has helped protect
Ahuja, however, disagreed. “In consumers against payment
10 years, the Indian market will fraud. Banks, too, have
be at par with the US and China successfully adapted
as most of the pain points will technologies to provide
be sorted out, consolidation will customers with real-time
have happened and profitable account status, transfer of funds
models will have evolved,” she and stop-payment facilities.
said.
There are regulatory challenges
While Indian consumers are too. As investment rules in India
less wary of buying train or liberalised and it became easier
airline tickets online, most to move large amounts of
agree that the market will money into and out of the
mature only when consumers country, 100% foreign direct
start buying more expensive investment (FDI) in e-
categories such as apparel, commerce was ushered in.
home furnishings and jewellery. However, there were riders: FDI
was allowed only in B2B e-
Globally, the lifestyle category commerce activities and not in
E-commerce sales (in $ billion) in dominates e-commerce with a retail, and 26% of FDI must be
64% share of transactions, said
A-Pac (2006-11) the eBay Census Guide of 2009.
divested to the Indian public
within five years if the
The guide said that South India companies are listed in another
has the most active buyers (41% country.
Country/Year 2006 2007 2008 2009 2010 2011
of all transactions), followed by Therefore, FDI in B2C e-
Australia 9.5 13.6 20.4 26.4 28.7 31.1 West India (27%). However, commerce firms is not
China 2.4 3.8 6.4 11.1 16.9 24.1 West India has the most active automatic; approvals must be
India 0.8 1.2 1.9 2.8 4.1 5.6 sellers (46%), followed by sought from the Foreign
North India (28%). Investment Promotion Board,
Japan 36.8 43.7 56.6 69.9 80 90
There has been a rise in the which considers applications on
South Korea 9.6 10.9 12.4 14 15.9 17.9
number of companies taking up a case-to-case basis.
Asia-Pacific 59.9 73.3 97.7 124.1 145.5 168.7 e-commerce; major portals are As systems and regulations
shifting towards e-commerce improve, the volume of
instead of relying on transactions will rise.
Source: e-Marketer, data includes projections for 2009, 2010, 2011
advertising. The sites are selling
10 11

7. Sectors
as per themes – trekking, (insurance and banking), CAMs – an insurance repository. The
Today, in India, Travel adventure, wildlife, history, leading players in this segment include Policybazaar.com,
Gifts
several goods and This is the most popular
category in India. The deals
culture, etc. In 2010, industry Indiainfoline.com and banks such as ICICI, Axis and HDFC. Before the advent of the
internet, if you had to buy a gift,
estimates put the online travel
services are bought offered on tickets – rail and air – business at $6 billion. India’s you’d most likely visit the
as well as on hotel stays and nearest store and look through
online. The e- tours are major draws. Many
leading travel portals are
the shelves, sometimes for
Makemytrip, Yatra, Cleartip and
commerce sites categorise their offerings Travelguru. Business/finance sites growth hours. Gift sites have enabled
consumers to reduce the time
landscape includes spent on this activity. Now, you
companies that INTERNET USER PENETRATION (MARCH 2010) can browse through various
categories - toys, perfumes,
provide a single Travel sites growth
INTERNET USER PENETRATION (MARCH 2011)
jewellery, accessories - and buy
what you like in a matter of
product or service minutes.
as well as multi- INTERNET USER PENETRATION (MARCH 2010)
INTERNET USER PENETRATION (MARCH 2011) 47% 49% 47% 46%
product or multi- 41% 39% Matrimony
service firms. These portals provide seekers
with information on potential
40% matches and can include
These include 35%
31% 31% information such as the city of
clothes and 23% 22% residence, religion and caste.
INDIA ASIA - PACIFIC WORLDWIDE Allied services include
accessories, health astrological matching, legal
and beauty Source: Comscore State of the Internet With a Focus on India (2011).
help, beauty, clothing, etc.
India’s leading matrimony
Internet audience 15+ accessing Internet from Home or Work
products, books INDIA ASIA - PACIFIC WORLDWIDE portals are Shaadi.com,
Jeevansathi.com,
and magazines, Bharatmartimony.com and
computers and Source: Comscore State of the Internet With a Focus on India (2011).
Internet audience 15+ accessing Internet from Home or Work
Indiamatrimony.com.
peripherals, cars, Stock trading Real estate
This category is rapidly gaining These sites provide information
software, form. E-policies, said the prominence in India, based on on properties users wish to buy,
electronics, home Automobiles newspaper, will be available its economic performance and sell or rent. They allow you to
On these sites, you can buy and across the life, motor and the impact of growth on stock search by location, cost, size,
appliances, sell cars and two-wheelers. health segments. The regulator markets. The services include etc. Normally, the site provides
These include new and used buying and selling of stocks, you with the contact details of
entertainment, real vehicles. Some of the services
is said to be in the midst of
infrastructure checks and might market analysis, research, the buyer/seller/broker. There
estate and jobs, to these firms provide are: start allotting licences by June company profiles and data, are several allied services, too,
Research, reviews, evaluation, 2012. stock performance over time which make these portals one-
name a few. technical specifications, and buying of mutual funds. stop shops for consumers and
insurance and finance. Quoting industry sources, the The advantage is that you no provide the portals with several
newspaper said ICICI Prudential longer need a stock broker, and revenue streams. These
Life Insurance and Birla SunLife the commissions are a fraction services include housing
Financial services Insurance would be among the
first to launch. While customer
of what broking houses charge. finance, loan instalment
While banking services have calculators, loan rate
uptake may be low initially – 2% Leading stock trading websites
been available for a while comparisons, loan eligibility
to 5% of new business – it include Sharekhan.com,
online, financial products such calculators, insurance, interior
would rise to 10% to 15% within ICICIDirect.com,
as mutual funds can also be design and packers and movers.
a year. Indiabulls.com, Religare.com,
purchased off the internet now. Indiainfoline.com and Some of the leading realty
“Policy holders will understand 5Paisa.com. Many banks, such portals are Magicbricks.com,
The ‘Business Standard’
the ease of owning an e-policy as Axis and HDFC, also offer the Makaan.com, Indiaproperty.com
newspaper recently reported
and gravitate towards it,” said service. and 99acres.com.
that insurance policies may
KR Chandrasekaran, head
soon be issued in electronic
12 13

8. technology brings, can provide a
range of goods and services at
Online ads
Personals sites growth discounted prices. India is Retail sites growth Indians access the internet
expected to have the third largest from home, office and on their
internet user base by 2013, which phones. There is a large
INTERNET USER PENETRATION (MARCH 2010) INTERNET USER PENETRATION (MARCH 2010) population that now uses the
is a major opportunity for online
INTERNET USER PENETRATION (MARCH 2011) retail stores. INTERNET USER PENETRATION (MARCH 2011) internet as its primary source of
information and bases its
‘Campaign India’ (February 24, purchase decisions on what it
2012) said that the ecosystem views online. No wonder, then,
14% 63% 63%
13% required for online retailing to 55% 56% that advertisers have identified
54%
flourish in India is at an inflection 47% the internet as the primary
9% point. “Rising standards of living medium for marketing their
8%
and a burgeoning, upwardly businesses. Online advertising
5% 5% mobile middle-class with high is expected to grow
disposable incomes, availability of exponentially – in 2008-09,
a much wider range of products... industry estimates pegged
and lower prices compared to growth at 38%; in 2009-10 it
INDIA ASIA - PACIFIC WORLDWIDE INDIA ASIA - PACIFIC WORLDWIDE
brick and mortar retail driven by was estimated at 32%.
disintermediation and reduced
Source: Comscore State of the Internet With a Focus on India (2011). inventory and real estate costs Source: Comscore State of the Internet With a Focus on India (2011).
Internet audience 15+ accessing Internet from Home or Work Internet audience 15+ accessing Internet from Home or Work
have helped e-commerce get a
larger share of the consumers’
that of candidates. The major wallet,” reported ‘Campaign India’.
Job search job portals are Naukri.com, The eBay India Census 2011,
The internet has simplified the Monsterindia.com, and which studied e-commerce
search for the right job and Timesjobs.com. The allied consumer patterns, noted some
presented an e-commerce services include resume key trends: Online shopping is
opportunity. In India, a number building and employment mainstream and a pan-India
of portals match a prospective counselling. phenomenon, rural buyers and
employer’s requirements with sellers are increasingly making
their presence felt, and the
number of women shoppers is
Career services and development growing.
sites growth Kashyap Vadapalli, director
(category and business
INTERNET USER PENETRATION (MARCH 2010) development), eBay India, told
‘Campaign India’: “We see
INTERNET USER PENETRATION (MARCH 2011)
aspiring consumers from smaller
cities latching on to online
shopping like never before.”
40%
37% These consumers, he pointed out,
have the aspiration for brands and
22% 25% 23% lifestyle products, but no access.
19% Online shopping destinations
resolve this problem.
Added Fundsupermart’s D’Souza:
INDIA ASIA - PACIFIC WORLDWIDE “[Online retailing] will give
strength to the Indian growth
Source: Comscore State of the Internet With a Focus on India (2011). story by broad-basing the
Internet audience 15+ accessing Internet from Home or Work consumption story across India’s
many towns, cities and all
genders.”
tailing will grow. Internet
Online retailing retailers, because they don’t Some of India’s leading retail
As web connections improve have to invest in brick and stores include Pantaloon’s
and credit cards become more mortar stores or a large staff FutureBazaar.com, Flipkart.com
common, online retailing or e- and because of the saving and Indiatimes.com.
14 15

9. Opportunities
existent in tiers 2 and 3 cities),” past that mark. In India, for changed the way banking
pointed out 20:20 MSL’s Ahuja. instance the e-commerce was traditionally perceived.
“Data shows that most goods growth rate has been projected ‘Demat’ (electronic)
shipped are reached to cities as 51%. accounts for sale/purchase
with a population of 3 million or of stocks and shares, foreign
less. Also, the internet user Virtual businesses exchange services,
base is expected to grow to 120 direct/instant payment of
million soon, so there will be E-commerce has enabled bills on the account-
new users to target.” enterprises to become virtual holder’s behalf, financial
businesses. A virtual enterprise planning and advice,
KIPL’s Patel believes that the electronic funds transfer are
opportunity is “infinite”. is a modular structure of
companies, customers, just a few of the services
“Commerce is more than offered online.
10,000 years old. E-Commerce competitors, suppliers, linked
is only 15 years old. As of now, by information technology. The • Credit/debit cards: Banks
India has very few websites web is used to share skills, have empowered
people know, remember or costs, and access one another's consumers with credit and
trust. We need many more,” he markets. debit cards, without which e-
said. He pointed out that e- The flexibility of a shared commerce would be
commerce also provided an network allows companies to impossible.
opportunity to empower maximise the use of resources
smaller entrepreneurs in • Information directories:
and compete in a complex
remote areas. E-commerce The web offers a host of
market.
could also be the catalyst for information directories that
‘social product development’ list products and services
and ‘crowd funding’, said Patel. Lower search costs with appropriate sub-
headings for those looking
His views were echoed by Tlabs’ In terms of costs, e-commerce for information. Message
Jain. “The opportunity lies in spells good news. The Internet boards, chat rooms and
tapping into markets that encourages high transparency forums add to the
haven’t been easily accessible - in prices. As competitors interactive experience.
rural areas, for example - as publish their prices on the web,
broadband and mobile Internet there are search engines that
technologies become more monitor prices across websites.
pervasive,” he said. This is supplemented by the
growth of protocols such as
XML.
Global trade
There are also fears that price
E-commerce has changed the transparency may prompt
way businesses approach collusion. However, increased
globalisation. Businesses are communication and frequent
leaning towards International market interactions will deter
Financial Reporting Standards this.
(IFRS), and internet financial
reporting. While the former is a
global standard for accounting The rise of facilitators
and financial reporting, the
The opportunities for e- argument, but it’s also a truism population is under 25 years of The internet today is flooded
latter has been extremely
commerce — in fact, businesses that the above factors will age, and they are growing richer with facilitators that simplify
helpful to e-commerce
in general — are well collectively be the growth as they join the workforce. Per electronic transactions.
companies.
documented: rising incomes, engine for e-commerce. capita is on the rise. The
8% GDP growth, a young internet offers better deals and Globally, the annual growth rate • Net banking/phone
population with high “The opportunities are plenty. a wider variety compared to of e-commerce is estimated as banking: Online banking is a
aspirations. Call it a clichéd Almost half the Indian supermarkets (which are non- 28%. Some countries are way powerful tool and has
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10. Challenges
Very often, the payments carry risk that people are not easily Furthermore, loopholes in the The Information and
the baggage of octroi, entry tax, willing to take. current legal and regulatory Technology Act was passed to
VAT and several state - specific framework, lack of assurance in make e-commerce safe. It
Cyber crime is a serious concern
forms that can be baffling. safeguarding the privacy of imposes heavy penalties on
the world over. It is a law
personal and business data, those who misuse the channel
enforcement challenge for
lack of payment gateways have to defraud others.
governments.
Logistics hampered the growth of e-
commerce.
Customers want their goods
delivered in perfect condition
and within a specific time
frame. Regular post is not a
viable option and couriers have
Common cyber crimes
their limitations in terms of
reach. All this adds to the costs. CRIME DESCRIPTION
Shipping high - value goods
might need insurance, which is Virus A program that attaches itself to applications or other software,
an additional cost. damaging systems and files
Phishing Perpetrator sends out e-mails that link to fraudulent websites,
causing victim to release personal information
Vendor
Botnet Hacker transmits instructions to other computers for the purpose
management of controlling them
Very often, vendors end up Spoofing Use of e-mail to trick an individual into providing personal
dealing with an inefficient information that is used for unauthorised purposes
system for inventory
management that affects the E-bank theft Perpetrator hacks into banking system, diverts funds to his/her
delivery process. In most cases, accounts
In India, the growth of e- there is no digital data for
commerce has been steady but
Payment products, no appealing visual, Netspionage Perpetrator hacks into systems or PCs to obtain confidential
information
slow. There is a clear lacuna in collection and and no mechanism to check
daily prices. When sites are not
the required resources and Online credit card fraud Illegal online acquisition of a credit card number and its
infrastructure that has taxes updated regularly, they cease to unauthorised use
hampered progress. attract buyers.
Net payment involves sharing Denial of service E-mail barrage, computer viruses or other techniques to damage or
Experts point to several some revenue (4% or more). shut down systems
hurdles. While With a thin profit margin, this
Fundsupermart’s D’Souza means parting with half the
Cyber crime in Software piracy Theft of intellectual assets
pointed to low bandwidth, profits. Businesses also have to e-commerce Spam Unsolicited e-mail
20:20 MSL’s Ahuja said factor fraudulent charges and
inventory based e-commerce is charge backs in their business One of the biggest fears that
capital-inefficient, the revenue model. consumers have in e-
models are shaky and there is commerce is cyber crime.
little consolidation. Tlabs’ Jain, “The biggest challenge is in the Cyber crime includes criminal
on the other hand, listed supply area of payments,” said acts such as viruses, phishing
D’Souza. “Most end consumers and denial of service attacks AREAS OF CONCERN • Establishing trust and goods have made buyers
chain automation, logistics, the
are sceptical while paying that cause e-commerce winning confidence isn’t easy. suspicious. Logistics must
lack of easy payment solutions • Quality of goods and services
online, which has forced e- websites to lose revenues. Brick and mortar stores tend improve.
and increased return in goods. is a concern. E-commerce
tailers to organise to be more trusted, it’s no
Srinivasan said that consumers E-commerce companies suffer firms need to focus on this. • Many sites lack detailed
unconventional methods of surprise. E-commerce firms
are “not adequately protected heavy losses due to stolen information about products
payments.” • Security is promised, but not will have to work hard to gain
against fraud, misleading assets, breakdown of websites and pricing. Transparency on
always delivered. Increased consumers’ trust.
claims or poor service”. This is why cash on delivery is a and so on. Apart from the this front is critical.
investment in security will • Delivery times tend to be a
preferred option in India. financial loss, the company’s bring more customers to this problem. Too many cases of
However, it’s not the easiest reputation is at stake. For the platform. late deliveries or damaged
thing for businesses. “Cash on customer, it is a loss at the
delivery sucks and needs to mere push of a button and it’s a
die,” said Jain.
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