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International Journal of
DEVELOPMENT RESEARCH

ISSN: 2230-9926 International Journal of Development Research

Vol. 6, Issue, 03, pp. 7253-7256, March, 2016

Full Length Research Article

A STUDY ON IMPACT OF E-COMMERCE ON INDIA’s COMMERCE
1,*Dr. Rajasekar, S. and 2Sweta Agarwal
1Principal, Akshaya Institute of Management Studies, Coimbatore – 641032, Tamilnadu, India
2Research Scholar, Bharathiyaar University, Coimbatore, Assistant Professor, Akshaya Institute of Management
Studies, Coimbatore – 641032, Tamilnadu, India

ARTICLE INFO ABSTRACT

E-commerce involves an online transaction. E-commerce provides multiple benefits to the

Article History:
consumers in form of availability of goods at lower cost, wider choice and saves time. The
Received 22nd December, 2015
general category of ecommerce can be broken down into two parts: E-Merchandise & E-finance.
Received in revised form
24th January, 2016 Many companies, organizations, and communities in India are doing business using E-commerce
Accepted 17th February, 2016 and also are adopting M-commerce for doing business. Ecommerce is showing tremendous
Published online 31st March, 2016 business growth in India. Increasing internet users have added to its growth. Despite being the
second largest user base in world, only behind China (650 million, 48% of population), the
Key Words: penetration of e-commerce is low compared to markets like the United States (266 M, 84%),
or France (54 M, 81%), but is growing at an unprecedented rate, adding around 6 million new
E-commerce, entrants every month. The industry consensus is that growth is at an inflection point. India's e-
E-finance, commerce market was worth about $3.9 billion in 2009, it went up to $12.6 billion in 2013. In
E-Merchandise, 2013, the e-retail segment was worth US$2.3 billion. About 70% of India's e-commerce market is
M- Commerce. travel related. According to Google India, there were 35 million online shoppers in India in 2014
Q1 and is expected to cross 100 million mark by end of year 2016. By 2020, India is expected to
generate $100 billion online retail revenue out of which $35 billion will apparel sales are set to
grow four times in coming years. This paper is outcome of a review of various research studies
carried out on Impact of E-commerce on Indian Commerce.

Copyright © 2016, Dr. Rajasekar and Sweta Agarwal. This is an open access article distributed under the Creative Commons Attribution License, which permits
unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

INTRODUCTION Electronic commerce is a type of business model, or segment

of a larger business model, that enables a firm or individual to
India has emerged as one of the major players on the new conduct business over an electronic network, typically the
international business scene. Its unstoppable economic growth internet. E-commerce is the buying and selling of goods and
since reforms in 1991 has become the focus of attention of services, or the transmitting of funds or data, over an
researchers in the area of international business and electronic network, primarily the Internet. These business
management. The purpose of this paper is to review the impact transactions are business-to-business, business-to-consumer,
of e-commerce on Indian Commerce that has been published consumer-to-consumer or consumer-to-business. The term e-
in top business and management journals, with the aim of tail is used in reference to transactional processes around
knowing what are the most influential papers, what are the online retail. E-commerce is conducted using a variety of
issues that have received the most attention, which are the applications, such as email, fax, online catalogs and shopping
main findings or what more needs to be done in terms of carts, Electronic Data Interchange (EDI), File Transfer
research Protocol, and Web services. It can be thought of as a more
advanced form of mail-order purchasing through a catalog. E-
E-COMMERCE Commerce is the movement of business onto the World Wide
E-commerce is a paradigm shift. It is a ``disruptive” Web. The effects of e-commerce are already appearing in all
innovation that is radically changing the traditional way of areas of business, from customer service to new product
doing business. design. It facilitates new types of information based business
processes for reaching and interacting with customers like
*Corresponding author: Dr. Rajasekar, S., online advertising and marketing, online order taking and
Principal, Akshaya Institute of Management Studies, Coimbatore – online customer service.
641032, Tamilnadu, India.
7254 Dr. Rajasekar and Sweta Agarwal. A study on impact of e-commerce on India’s commerce

There has been a rise in the number of companies taking up e-  1995: Jeff Bezos launches Amazon.com and the first
commerce in the recent past. Major Indian portal sites have commercial-free 24-hour, internet-only radio stations,
also shifted towards ecommerce instead of depending on Radio HK and NetRadio start broadcasting. eBay is
advertising revenue. Many sites are now selling a diverse founded by computer programmer Pierre Omidyar as
range of products and services from flowers, greeting cards, AuctionWeb.
and movie tickets to groceries, electronic gadgets, and  1996: IndiaMART B2B marketplace established in India.
computers, etc  1996: ECPlaza B2B marketplace established in Korea.
 1998: Electronic postal stamps can be purchased and
Historical Development of E-Commerce downloaded for printing from the Web.
 1999: Alibaba Group is established in
A timeline for the development of e-commerce: China. Business.com sold for US $7.5 million to
eCompanies, which was purchased in 1997 for US
 1971 or 1972: The ARPANET is used to arrange a $149,000. The peer-to-peer filesharing
cannabis sale between students at the Stanford Artificial softwareNapster launches. ATG Stores launches to sell
Intelligence Laboratory and the Massachusetts Institute of decorative items for the home online.
Technology, later described as "the seminal act of e-  2000: The dot-com bust.
commerce" in John Markoff's book What the Dormouse  2001: Alibaba.com achieved profitability in December
Said. 2001.
 1979: Michael Aldrich demonstrates the first online  2002: eBay acquires PayPal for $1.5 billion. Niche retail
shopping system. companies Wayfair and NetShops are founded with the
 1981: Thomson Holidays UK is first business-to-business concept of selling products through several targeted
online shopping system to be installed. domains, rather than a central portal.
 1982: Minitel was introduced nationwide in France  2003: Amazon.com posts first yearly profit.
by France Télécom and used for online ordering.  2003: Bossgoo B2B marketplace established in China.
 1983: California State Assembly holds first hearing on  2004: DHgate.com, China's first online b2b transaction
"electronic commerce" in Volcano, California. Testifying platform, is established, forcing other b2b sites to move
are CPUC, MCI Mail, Prodigy, CompuServe, Volcano away from the "yellow pages" model.
Telephone, and Pacific Telesis. (Not permitted to testify is
 2007: Business.com acquired by R.H. Donnelley for $345
Quantum Technology, later to become AOL.)
million.
 1984: Gateshead SIS/Tesco is first B2C online shopping
 2009: Zappos.com acquired by Amazon.com for $928
system and Mrs Snowball, 72, is the first online home
million. Retail Convergence, operator of private sale
shopper
website RueLaLa.com, acquired by GSI Commerce for
 1984: In April 1984, CompuServe launches the Electronic $180 million, plus up to $170 million in earn-out payments
Mall in the USA and Canada. It is the first comprehensive based on performance through 2012.
electronic commerce service.
 2010: Groupon reportedly rejects a $6 billion offer
 1990: Tim Berners-Lee writes the first web from Google. Instead, the group buying websites went
browser, WorldWideWeb, using a NeXT computer. ahead with an IPO on 4 November 2011. It was the largest
 1992: Book Stacks Unlimited in Cleveland opens a IPO since Google.
commercial sales website (www.books.com) selling books  2011: Quidsi.com, parent company of Diapers.com,
online with credit card processing. acquired by Amazon.com for $500 million in cash plus $45
 1993: Paget Press releases edition No. 3 of the first app million in debt and other obligations. GSI Commerce, a
store, The Electronic AppWrapper company specializing in creating, developing and running
 1994: Netscape releases the Navigator browser in October online shopping sites for brick and mortar businesses,
under the code name Mozilla. Netscape 1.0 is introduced acquired by eBay for $2.4 billion.
in late 1994 with SSL encryption that made transactions  2014: Overstock.com processes over $1 million
secure. in Bitcoin sales. India’s e-commerce industry is estimated
 1994: Ipswitch IMail Server becomes the first software to have grown more than 30% from 2012 to $12.6 billion
available online for sale and immediate download via a in 2013. US eCommerce and Online Retail sales projected
partnership between Ipswitch, Inc. and OpenMarket. to reach $294 billion, an increase of 12 percent over 2013
 1994: "Ten Summoner's Tales" by Sting becomes the first and 9% of all retail sales. Alibaba Group has the
secure online purchase. largest Initial public offeringever, worth $25 billion.
 1995: The US National Science Foundation lifts its former  2015: Amazon.com accounts for more than half of all
strict prohibition of commercial enterprise on the Internet. ecommerce growth, selling almost 500 Million SKU's in
 1995: Thursday 27 April 1995, the purchase of a book by the US.
Paul Stanfield, Product Manager for CompuServe UK,
from W H Smith's shop within CompuServe's UK KEY DRIVERS IN INDIAN E-COMMERCE ARE
Shopping Centre is the UK's first national online shopping
service secure transaction. The shopping service at launch  Large percentage of population subscribed to broadband
featured W H Smith, Tesco, Virgin Megastores/Our Price, Internet, burgeoning 3G internet users, and a recent
Great Universal Stores (GUS), Interflora,Dixons Retail, introduction of 4G across the country.
Past Times, PC World (retailer) and Innovations.
7255 International Journal of Development Research, Vol. 06, Issue, 03, 7253-7256, March, 2016

 Explosive growth of Smartphone users, soon to be world's out of three customers currently makes transactions through
second largest Smartphone user base. mobiles in tier-1 and tier-2 cities. In 2015, 78 per cent of
 Rising standards of living as result of fast decline in shopping queries were made through mobile devices,
poverty rate. compared to 46 per cent in 2013. In 2015, the highest growth
 Availability of much wider product range (including long rate was seen in the apparel segment almost 69.5 per cent over
tail and Direct Imports) compared to what is available at last year, followed by electronic items by 62 percent, baby
brick and mortar retailers. care products at 53 per cent, beauty and personal care products
 Competitive prices compared to brick and mortar retail at 52 per cent and home furnishings at 49 per cent. It revealed
driven by disintermediation and reduced inventory and real that Mumbai ranks first in online shopping followed by Delhi,
estate costs. Ahmedabad, Bangalore and Kolkata. On the mode of payment,
 Increased usage of online classified sites, with more almost 45 per cent of online shoppers reportedly preferred
consumer buying and selling second-hand goods cash on delivery mode of payment over credit cards (16 per
 Evolution of Million-Dollar startup like Jabong.com, cent) and debit cards (21 per cent).
Saavn, Makemytrip, Bookmyshow, Zomato Etc. Only 10 per cent opted for internet banking and a scanty 7 per
cent preferred cash cards, mobile wallets, and other such
India's retail market is estimated at $470 billion in 2011 and is modes of payment, it said. Among the above age segments,
expected to grow to $675 billion by 2016 and $850 billion by 18-25 years of age group has been the fastest growing age
2020, – estimated CAGR of 10%. According to Forrester, the segment online with user growth being contributed by both
e-commerce market in India is set to grow the fastest within male and female segments. The survey revealed that 38 per
the Asia-Pacific Region at a CAGR of over 57% between cent of regular shoppers are in 18-25 age group, 52 per cent in
2012 –2016. India has an internet user base of about 354 26-35, 8 per cent in 36-45 and 2 per cent in the age group of
million as of June of 2015. Despite being the second largest 45-60.
user base in world, only behind China (650 million, 48% of
population), the penetration of e-commerce is low compared Challenges of E-commerce in India
to markets like the United States (266 M, 84%), or France (54 India has less credit card population, lack of fast postal
M, 81%), but is growing at an unprecedented rate, adding services in rural India. Accessing the Internet is currently
around 6 million new entrants every month. The industry hindered down by slow transmission speeds, frequent
consensus is that growth is at an inflection point. In disconnects, cost of Wireless connection and wireless
India, cash on delivery is the most preferred payment method, communication standards over which data is transmitted.
accumulating 75% of the e-retail activities. Demand for High-speed-bandwidth Internet connection not available to
international consumer products (including long-tail items) is most citizens of the nation at an affordable rate. In India,
growing much faster than in-country supply from authorized mostly people are not aware about the English language or not
distributors and e-commerce offerings. Largest e-commerce so good in English language. So that for the transaction over
companies in India are Flipkart, Snapdeal, Amazon India, and internet through electronic devices, language becomes one of
Paytm. the major factors to purchases, hire and sell a particular
product or services. Multiple issues of trust in e-commerce
Growth and Prospects of E-Commerce in India: technology and lack of widely accepted standards, lack of
payment gateways, privacy of personal and business data
Increasing internet and mobile penetration, growing connected over the Internet not assured security and
acceptability of online payments and favourable demographics confidentiality of data not in place to deploy ubiquitous IT
has provided the e-commerce sector in India the unique Infrastructure and its maintenance
opportunity to companies connect with their customers, it said.
There would be over a five to seven fold increase in revenue Conclusion
generated through e-commerce as compared to last year with
all branded apparel, accessories, jewellery, gifts, footwear are Growth of e-commerce depend to a great extent on effective
available at a cheaper rates and delivered at the doorstep, (as IT security systems for which necessary technological and
per industry body Assocham). It is noted that the buying trends legal provisions need to be put in place and strengthened
during 2016 will witness a significant upward movement due constantly. While many companies, organizations, and
to aggressive online discounts, rising fuel price and wider and communities in India are beginning to take advantage of the
abundant choice will hit the e-commerce industry in 2016. potential of e-commerce, critical challenges remain to be
overcome before e-commerce would become an asset for
It observed mobile commerce (m-commerce) is growing common people.
rapidly as a stable and secure supplement to the e-commerce
industry. Shopping online through smart phones is proving to With the explosion of internet connectivity through mobile
be a game changer, and industry leaders believe that m- devices like Smartphone and tablets, millions of consumers are
commerce could contribute up to 70 per cent of their total making decisions online and in this way enterprises can build
revenues. In India roughly 60-65 per cent of the total e- the brand digitally and enhance productivity but government
commerce sales are being generated by mobile devices and policies must ensure the cost effective methods/solutions. E-
tablets, increased by 50 per cent than in year 2015 and also Commerce in India is destined to grow both in revenue and
likely to continue upwards. It noted that the browsing trends, geographic reach. The challenge of establishing consumer
which have broadly shifted from the desktop to mobile devices trust in e-commerce poses problems and issues that need
in India, online shopping is also expected to follow suit, as one further research.
7256 Dr. Rajasekar and Sweta Agarwal. A study on impact of e-commerce on India’s commerce

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