E-Commerce From India Context - Part 2/2


E-Commerce From India Context - Part 2/2

E-Commerce From India Context - Part 2/2

Posted on 1st Apr 2016 12:13:23 in General

By: Elamurugu Sundararaj

4. Usage Classification

People tend to spend time on the internet based on their need and interest. Here we see some data trend. 

Usage Classification

People get into internet for various purposes, such as:

  • For entertainment purposes, to play games, listen to music or movies etc
  • To communicate with others, be it text chat or video chat or send mails etc
  • To avail any online services such as scheduling appointment or to use Government services and schemes etc
  • Here comes the next big thing - eCommerce. As we look at the data, the % of current usage and the estimated future usage for commercial transactio is more than 60%. But the reality has surpassed all estimates and is now more than 100%.
  • People use it for Social Networking like Facebook, Twitter etc
  • To avail and record for Financial purposes like tax paying, Insurance claim, Utility Bill pay etc
  • Other important sector, which could be the next major sector is about integrating and addressing all Rural needs such as Agri, loans, subsidies etc. Since this works out at the municipal or rural level, government initiatives are already underway.

Well, out of this eCommerce, do we have any segment-wise classification like inwhich business areas people spend more time and money? Yes and that is going to be our next topic.

5. Market Spread

E-Commerce is basically classified into various major sements based on usage. The statistics used here is based on historical data as of 2012.

Market Spread

  • Today, online ticket booking is the major sector in eCommerce, which takes the lion share of 71% from overall market. market primarily because of time saving, convenience to search, compare and reserve, friendly cancellation policies, acceptance of e-tickets by operators, associated or add-on facilities like hotel booking etc make this segment more attractive.
  • The next major segment is eTailing. Online product purchase is fast picking up.
  • 6% of online eCommerce users use it for Tax filing, Insurace, Share trading, utility bill pay and banking etc
  • The classifieds business takes the next big share from this market.
  • Miscellaneous services like scheduling appointment, government schemes etc takes remaining portion of it.

The next and concluding section of this paper will be on pushing and pulling factors of E-Commerce.

6. The Future

Advantages of E-Commerce

Let us first take a look at the pushing factors or Advantages of doing business through network enabled medium. The primary factor among all will be ease of doing business. It brings in lot of convenience, time saving, record keeping and comparison.

  • Reduction of transaction costs such as:
    1. Logistics
    2. Intermediaries
  • No Queue and No wait time
  • Price transparency thereby enabling better bargain power
  • Choices, User Feedback and Comparisons
  • Cash on Delivery (Payment Convenience)
  • To the company, it gives more accurate information on the user taste, preference based on gender, location, age, education etc. With this vital information, companies can develop their business model and products to localize their sales.
  • Elimination of trade barrier, location divide.
  • Price Consolidation. Since the buyers can cost compare, the price variation will come down significantly.

Government Initiatives

Government initiatives in making startup norms simpler and opening up various subsidy options will attract more business towards this market. The much expected GST, if materialized, will boost up online retailing, bring more investments, enable efficiency in operations especially in inter-state shipments, help to move from novelty to maturity, consolidate business climate and generate more employments.

Employment Generation

Whenever there is an industrial revolution or change it brings cheers and change in people lifestyle. For example, in the past with the advent of Swedeshi movement by Gandhiji, the domestic products got different attention and usage went up.

Recently, with the IT booming, it brought change in people mindset bridging location and society divide along with more dreams and positivity.

With the exploration of e-Commerce, this is going to bring more convenience, unleashing the additional time which otherwise would have spent in stores can better utilized on other resourceful activities with families thereby building better tomorrows.

As the consumer participation in this eco system will be more active, it will keep sellers always look for innovations.

This author believes that more accountability and measurability will make unorganized sectors especially in blue-collar segments to mature further and turn into organized ones.

The delivery phenomena which otherwise was a routine part of goods delivery has become a buzzword today and is slowly turning into more organized ones. Companies have already started outsourcing this area.

Challenges

Consumer perspective:

  • Credibility as the market is yet to mature. This problem is more acute in service sector due to reliability of people.
  • No defined or systematic way for product returns or payment refunds in case of defects.

Business perspective:

  • Availability of skilled resources and high attrition rate
  • Risk of fraud and cyber issues
  • Order fulfillment
  • Cost of Advertisement or Reach is high with the thin margin. This poses threat on Business scale-up and sustenance issues.

Conclusion

Both planned and ad-hoc purchases make this segment lucrative. Convenience of order booking at one place and deliver at another place without worrying on logistics, package and time (the Gift sector, for example) make this market further attractive.

Accelerated usage of Smart phones, gradual adoption or transition of pay wallets, for example paytm.com, e-money will trigger this market move upwards.

Vast amount of data getting generated on the consumer preference and spend power which in turn opens up other niche business segments such as Analytics using BigData etc.

Warehouses will be much more decentralized. The inventory control might become a challenge due to demand volatility and competition pressure.

As the usage becomes more common and awareness increases, the businesses will be interfacing with one another through tested API’s so as to provide an integrated shopping experience.



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