Title of the project

EMERGENCE OF E-COMMERCE IN INDIA AND IT’S FUTURE PROSPECTS WITH

REFERENCE TO AMAZON.COM

Submitted

By

NAME

To

SIKKIM MANIPAL UNIVERSITY FOR THE PARTIAL FULLFILLMENT OF THE BBA

DEGREE Sikkim – Manipal University of health, Medical and technological

science Distance Education wing, Syndicate House, Manipal – 576104

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CONTENTS

CHAPTER NAME OF THE TOPIC

Chapter – I  Introduction

Chapter – III Literature of Review

Data analysis
Chapter – IV
&
interpretation
Finding,
Chapter – V Suggestions&
Conclusion.

 Bibliography

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 BONAFIDE CERTIFICATE

It is certified that this project report titled “Emergence of e-commerce in

India and it’s future prospects with reference to Amazon.com With

reference to amazon.com” is the bona-fide work of NAME who carried out

the project work under my supervision is approved.

SIGNATURE SIGNATURE

HEAD OF THE DEPARTMENT FACULTY IN CHARGE

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 EXECUTIVE SUMMARY

This project includes study of modern retailing concept which help customer

as well as shopkeeper or companies to buy or sell products at lowest price,

with in time. Now everyone wants to save their time and to full fill their wish

E commerce comes in the reality. With the help of E commerce / E-tailing

anyone can buy anything from a pen to car with in a second. In this project I

try to find out that whether this service is helpful to the customer or will

increase problems to the customers. This project is done on secondary data, I

have analysed the secondary data from different sources like Internet,

newspaper magazines etc. . In the project in the starting I have given little

intro of RETAILING in INDIA and the formats of RETAIL in India like MALLS,

HYPER MARKET, Convenience store etc.E commerce working has been also

shown in the project how the E commerce is beneficial to the customers and

securities concern on E COMMERCE .I have given the advantages of E

commerce and how this modern world is getting changed or rather say

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getting more and more from the usage of internet. Top 10 companies which

are based over E commerce is also mentioned clearly in this project Ending

of this project contains suggestions and recommendations by me by studying

some projects and some reports available on Internet.

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ABSTRACT:

E commerce or online is growing at faster pace in India. It has witnessed

steady growth of 50-60 % over the years. E commerce accounts for 10 % of

e-commerce activities in India. Even though there are growth prospects for

online retail in India we have challenges which need to be addressed. The

article focuses on the opportunities and challenges for online retailers in

Indian business environment.

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Objectives

 There is no denying the fact that e-commerce has re-entered India

and is here to stay. Even the small

 and medium retailers of the country want to ride the wave and are

ready to make a fortune out of the

 market place concept. It may be now that online shopping has

become popular but the concept of e-

 Commerce was introduced long back in the 20th century.

 My study is all about the emergence of e commerce in India and its

impact in future in the Indian market

 My primary objective will be

 HOW ECCOMERCE EMERGE IN INDIA

 WHAT ARE THE OPPORTUNITY AND THREATS IN THIS SECOR

 HOW IS IT CHANGING INDIAN MARKET

 WHAT WILL BE THE FUTURE PROSPECT AND IMPACT IN INDIAN

MARKET?

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Problem statement and literature review -

E-Commerce has unleashed yet another revolution, which is changing the

way businesses buy and sell products and services. . E-commerce stands for
electronic commerce and pertains to trading in goods and services through
the electronic medium. India is showing tremendous growth in the
Ecommerce. The low cost of the PC and the growing use of the Internet is
one of reasons for that. There is a growing awareness among the business
community in India about the opportunities offered by E- Commerce. The
future does look very bright for e-commerce in India with even the stock
exchanges coming online providing an online stock portfolio and status with
a fifteen minute delay in prices. . In the next 3 to 5 years, India will have 30 to
70 million Internet users which will equal, if not surpass, many of the
developed countries.

My report will give an analysis of insight into India’s e-Commerce market. It

focuses on the various sub-segments of the e-Commerce market and
highlights the factors driving growth across these segments and the
challenges.

India is at the cusp of a digital revolution. Internet has become an integral

part of the growing urban Indian population. Various factors have been
driving this trend, such as:

 Declining broadband subscription prices

 Launch of 3G services leading to an ever-increasing number of

“netizens”

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 Urban India’s changing lifestyle

 Convenience of online shopping

 Changes in the supporting ecosystem

Although the trend of e-Commerce has been making rounds in India for 15
years, the appropriate ecosystem has now started to fall in place. The e-
Commerce market in India has enjoyed phenomenal growth of almost 50% in
the last five years.

Key factors driving the growth story of e-Commerce in India include:

 Considerable rise in the number of internet users

 Growing acceptability of online payments
 Proliferation of internet-enabled devices
 Favorable demographics

E-commerce provides an easy way to sell products to a large customer base.

However, there is a lot of competition among multiple e-commerce sites.
When users land on an e-commerce site, they expect to find what they are
looking for quickly and easily. Also, users are not sure about the brands or
the actual products they want to purchase. They have a very broad idea
about what they want to buy. Many customers nowadays search for their
products on Google rather than visiting specific e-commerce sites. They

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believe that Google will take them to the e-commerce sites that have their
product.

The challenge is also that each category will have a different set of facets to
be displayed. For example, searching for books should display their format,
as in paperpack or hardcover, author name, book series, language, and other
facets related to books. These facets were different for mobiles that we
discussed earlier. Similarly, each category will have different facets and it
needs to be designed properly so that customers can narrow down to their
preferred products, irrespective of the category they are looking into.

INTRODUCTION OF THE PROJECT REPORT

The previous Indian Government’s move in September 2012 to allow Foreign

Direct Investment (FDI) in Multi-Brand Retail (MBRT) was seen as a major

reform and was expected to attract global players along with significant

investment at the backend. It is fair to say that there has been a significant

gap between realized and expected benefits.

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When MBRT was allowed in 2012, Deloitte in India had shared its views in a

paper published in January 2013 – ‘Opening More Doors’. That paper had

identified the potential hurdles in realizing the envisaged benefits, which

included restrictions like minimum local sourcing from SMEs, designated

levels of investments at the backend, approvals required from state

governments and presence in million plus cities. While the previous

government has since looked to ease some of the restrictions, the situation

has not changed. These, coupled with the overall economic and political

climate that has prevailed since, had played a key role in the muted impact of

this ‘big bang’ reform.

Deloitte believes that the online retail could have significant direct and

indirect upsides to the consumption landscape in India. The B2C e-commerce

market in India has exhibited rapid growth and has attracted large

investments from the PE/VC community. With positive fillips from the

demand and supply side, this market is likely to reach $60Bn by 2017.

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From the policy perspective, it is essentially the inventory owned model that

is now looking for government approval. The market place model has seen

significant amount of FDI, either through the PE/VC route or with the entry of

global players like Amazon. Thus, it would be interesting to note whether any

policy announcement covers the marketplace model specifically, thus

causing flutter amongst existing players.

There was talk in early 2014 of FDI norms getting relaxed in B2C e-commerce.

But that momentum does not seem to continue with the change in regime,

especially with its negative view with regard to MBRT. It remains to be seen

as to how the current establishment views the online retail market

opportunity which could be a potential market discontinuity in the India

consumption story.

AT Kearney’s 2013- Global Retail ecommerce index stated that India has

unharnessed online retail potential. The growth of online retail can add

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immense value to different stake holders of Indian retail sector. The growth

prospects of online retail are high in India, but along with the growth

opportunities there are challenges which need to be addressed. E-retail and

Major online retail players in India E-retail or online retail is defined retailing

activities done through internet. We have many online or e-retailers in India

who provide a variety of merchandise to customers. In general retail business

is referred as Business to Consumer (B2C). Online retail players are classified

into two types category focused players and multi category focused.

Category focused players provide particular merchandise with deep

assortment. Ex: - Myntra, Jabbong (Apparels and Lifestyle products), Big

basket, Local banya (Grocery segment) and Fabfurnish, Pepper fry

(Furniture), Carat lane, Juvalia and you (jewellery), First cry, my baby cart

(baby products). Multi category players provide variety of merchandise with

limited assortment. Ex: - Flipkart, Amazon, Future bazar and Snapdeal etc.

For better understanding we look at some of the categories and the major

online retailers in these categories. Retailers provide categories like books,

stationery, electronics, furniture, apparels, personal care, grocery, flowers,

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sports goods and services also. The major players in book category include

Amazon, Flipkart, Napoli and Land mark. Stationery items are sold by online

players like Flipkart, Amazon, Stationery shop, Snap deal and Home shop 18

etc. In Electronics segment we have specialised players like Croma (Tata

group) and E-zone (Future group) alone with other players like Flipkart,

amazon, Infibeam, Snapdeal, Future bazar, Naaptol who sell electronics items

like mobile phones, computers, tablets, television and other durables. In

Furniture category we have players like Fabfurnish, Pepper fry, Urban ladder,

Home town, Zansaar and Homeshop18 etc. In Apparel and personal care

segment we have Myntra, Jabbong, Zovi, fashion and you, Flipkart, Amazon

and Yebhi.com etc. In grocery category the major players include Bigbasket,

Greencart, ekstop, Local banya, Nature’s basket etc. We have specialised

players like Ferns n Petals, Tilia and Floraindia for flowers and birthday cakes

etc. In sports goods the major category players include Decathlon,

Playground online, Khelmart and Sports 365 etc. Service retailers include

lenskart which provide eye tests along with eye lens, glasses and well forte

for some limited medical service. Some retailers like Apollo pharmacy,

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Healthkart and Buydrug which do online sales of medicines. If we look at the

whole sale market (B2B) we have players like best price (Wal-Mart) who is

operational in online space. In C2C (Customer to Customer) we have E-bay,

Olx which serve as an on line shopping space and for auctioning of different

products.

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Scope and Methodology of the study

The study looks into the online retail market and how it had impacted the

Indian retail industry. The scope of the research study is limited to online

retail market, the opportunities and challenges for the evolving online retail

market in India. Source of Data: The study is primarily based on the

secondary data collected from journals, industry reports, company websites,

news articles and reports.

Online Retail Market in India and its impact on Indian retail

Organised retail in India is still in a nascent stage with a retail penetration of

7.5% in 2013 (E&Y, 2013). Online retail forms 7.9 % of organised retail and

0.5 % of overall retail in 2013. It has witnessed steady growth of 50-60 % with

a projected value of 3.2 billion USD in 2014. Online retailing has affected the

sales turnover of the brick and mortar stores. With the advent of online

retailers the biggest impact was the entry of traditional retail players into

online space. This is evident from the trend of online store additions by

traditional retail players.

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If we look at the trend we can witness steady increase in the growth of

online stores by traditional retail players in India. From 2010- 2012, there

was decreasing trend in net store additions but we can find an increasing

trend in the subsequent year. For example, Shoppers stop has entered the

online space in 2008. We have other players like Future bazar, Croma (Tata

group), Nature’s basket (Godrej) and Aditya Birla nuvo entered the online

space to compete against the online retailers.

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ABOUT RETAIL

The word retail is derived from the French word retailer, which means to cut

off apiece or to break bulk.

A retailer may be defined as a dealer or trader who repeatedly sells goods in

small quantities. The sale of goods or commodities in small quantities directly

to consumers. Of, relating to, or engaged in the sale of goods or commodities

at retail. It also means to sell in small quantities directly to consumers

According to PHILIP KOTLER

Retailing includes all the activities involved in selling goods or services to the

final consumers for personal use. A Retailer or Retail store is any business

enterprises whole sales volumes comes primarily from retailing,

TYPES OF RETAIL SECTOR

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Retailing is one of the pillars of the economy in India and accounts for 35% of

GDP. The retail industry is divided into organized and unorganized sectors.

Over 12 million outlets operate in the country and only 4% of them being

larger than 500 sqft (46 m2) in size.

Organized Retail Unorganized Retail

ORGANIZED RETAIL:Organized retailing refers to trading activities undertaken

by licensed retailers, that is, those who are registered for sales tax, income

tax, etc. These include the corporate backed hypermarkets and retail chains,

and also the privately owned large retail businesses. Organized retail

segment has been growing at a blistering pace, exceeding all previous

estimates. According to a study by Deloitte Haskins and Sells, organized retail

has increased its share from 5 per cent of total retail sales in 2006 to 8 per

cent in 2007. The fastest growing segments have been the wholesale cash

and carry stores (150 per cent) followed by supermarkets (100 per cent) and

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hypermarkets (75-80 per cent). Further, it estimates the organized segment

to account for 25 per cent of the total sales by2011.

UNORGANIZED RETAIL: Unorganized retailing, on the other hand, refers to

the traditional formats of low-cost retailing, for example, the local kirana

shops, owner manned general stores, paan / beedi shops, convenience

stores, hand cart andpavement vendors, etc. Unorganized retailing is defined

as an outlet run locally by the owner or caretaker of a shop that lacks

technical and accounting standardization. The supply chain and sourcing are

also done locally to meet local needs. Its organized counterpart may not

obtain its supplies from local sources.

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RETAILING FORMATS IN INDIA

MALLS: The largest form of organized retailing today. Located mainly in

metro cities, in proximity to urban outskirts. Ranges from 60,000 sqft to 7,

00,000sqft and above. They lend an ideal shopping experience with an

amalgamation of product, service and entertainment; all under a common

roof. Examples include Shoppers Stop, Pyramid, and Pantaloon.Shopping-

centre development has attracted real-estate developers and corporate

houses across cities in India. As a result, from just 3 malls in 2000, India is all

set to have over 220 malls by 2005. Today, the expected demand for quality

retail space in2009 is estimated to be around 40 million square feet. While

previously it was the large, organized retailers with their modern, up-market

outlets, and direct consumer interface- who had been a key factor driving the

growth of organized retail in the country, now it is the malls which are

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playing the role. Segmentation in malls, like up-market malls, mid-market

malls, etc., proper planning, correct identification of needs, quality products

at lower prices, the right store mix, and the right timing, would Ensure the

success of the mall revolution in India.

SPECIALTY STORES:

Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer

Crossword, RPG's Music World and the Times Group's music chain Planet M,

are focusing on specific market segments and have established themselves

strongly in their sectors.

DISCOUNT STORES:

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As the name suggests, discount stores or factory outlets, offer discounts on

the MRP through selling in bulk reaching economies of scale or excess stock

left over at the season. The product category can range from a variety of

perishable/ nonperishable goods.

DEPARTMENTAL STORES:

Departmental Stores are expected to take over the apparel business from

exclusive brand showrooms. Among these, the biggest success is K Raheja's

Shoppers Stop, which started in Mumbai and now has several large stores

(over 30,000 sq. ft.) across India and even has its own in store brand for

clothes called Stop!.

HYPER MARTS/SUPERMARKETS:

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Large self service outlets, catering to varied shopper needs are termed as

Supermarkets. These are located in or near residential high streets. These

stores today contribute to 30% of all food & grocery organized retail sales.

Super Markets can further be classified in to mini supermarkets typically

1,000 sqft to 2,000 sqft and large supermarkets ranging from of 3,500 sqft to

5,000 sq ft. having a strong focus on food & grocery and personal sales

CONVENIENCE STORES:

These are relatively small stores 400-2,000 sq. feet located near residential

areas. They stock a limited range of high-turn over convenience products and

are usually open for extended periods during the day, seven days a week.

Prices are slightly higher due to the convenience premium.MBOs: Multi

Brand outlets, also known as Category Killers, offer several brands across a

single product category. These usually do well in busy market places and

Metros.

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CONTRIBUTIONOF FDI INRETAILING

India will look into the industry’s demand for foreign direct investment (FDI)

for multiple products in the retail sector. FDI is already permitted in the retail

sector in some segments. There is a demand to extend FDI in retail sector. At

present, India allows 100percent FDI in cash- and carry wholesale trading and

export trading through the automatic route, while 51 percent FDI is

permitted in single brand retailing. According to a join study by Assocham

and accounting and consultancy firm KMPG, the total retail market in India is

estimated at $ 353 billion in 2008, and expected to grow at eight percent

annually to touch $ 416 billion by 2010.The developing countries have the

most preferable destination for FDI. India is also one of the most important.

It will help in increasing employment levels as FDI would result in market

growth and expansion which in turn will result in employment generated at

various levels.

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ESTIMATES AND PREDICTIONS FOR RETAIL SECTOR:

At present, the industry is estimated to be at more than US$ 400 billion by a

study of McKinsey. The Economist Intelligence Unit (EIU) estimates the retail

market in India will increase to US$609.9 billion in 2010 from US$394 billion

in 2005. KPMG Report says that the organized retail would grow at a higher

rate than the GDP in the next five years. The retail sector would generate

employment for more than 2.5 million people by the year 2010, predicts an

analysis by MaFoi Management Consultants Ltd. Traditional Vis a Vis Modern

Format Retailers The retail boom will face a strong competition from the

12million mom-and-pop stores. These are easily accessible and provide

services like free home delivery and goods at credit, which is not possible

with hypermarkets and supermarkets. Buying from Malls, Supermarkets and

Department stores like Big Bazaar, Marks & Spencer’s, etc. provide a

different environment where one can pick and choose from a variety of

products. Owing to the entry of such big players, the small shopkeepers fear

losing their business. Reliance Retail Ltd. has been inviting such people to

join in its

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.Dairy business as franchisees.

Growth of Retail Sector in India

ERETAILING

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E-tailing began to work for some major corporations and smaller

entrepreneurs as early as 1997 when Dell Computer reported multimillion

dollar orders taken at its Web site. The success of Amazon.com hastened the

arrival of Barnes and Noble's e-tail site. Concerns about secure order-taking

receded. 1997 was also the year in which Auto-by-Tel reported that they had

sold their millionth car over the Web, and Commerce Net/Nielsen Media

reported that 10 million people had made purchases on the Web. E

commerce uses internet as a medium for customers to shop for the goods or

services. It can be either pure-plays or bricks-and-clicks. Pure-play uses

internet as primary means of retailing while bricks-and-clicks uses the

internet as an addition to the physical store. Now a day retailers have started

offering almost everything under the sun on internet. From products like

groceries to services like online gaming and jobs, E commerce covers all

frontiers. Unfortunately, India has lagged in e-retail growth story due to low

density of internet connections, lower penetration of credit cards and

customer anxiety in using new technologies. During the dotcom boom

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Ecommerce was the sunrise industry, the one that would change the face of

the world. While EBay and Amazon the twin pillars of Ecommerce in US did

bring about paradigm shift in USA, the tech pundits in India are still a bit iffy

about Ecommerce in India. Today the Internet might be viewed as a huge

market potentially capable of covering the population of the whole world.

This is why electronic commerce or E-Commerce is so attractive for many

traditional businesses’-Commerce consists of the buying and selling of

products or services over electronic systems such as the Internet and other

computer networks. The amount of trade conducted electronically has grown

dramatically since the large introduction of the Internet. A wide variety of

commerce is conducted in this way, including things such as electronic funds

transfer, supply chain management, e-marketing, online marketing, online

transaction processing, electronic data interchange, automated inventory

management systems, and automated data collection systems. Modern

electronic commerce typically uses the World Wide Web in at least some

point in the transaction\'lifecycle.

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The E-Commerce Market: Size and Trends

Since mid-1990’s traditional traders followed large Computer Manufacturers

into the new sphere and today you can buy practically anything through the

Internet: from a bunch of flowers to a car. The only exception seems to be a

trip to Mars. Today E-Commerce market is huge and still growing. The E-

commerce market is totally democratic. This is perfect capitalism: if you sell’s

you win, if you don’t sell you loose. It’s all about marketing and economic

rules of demand and supply. Certain products or services appear more

suitable for online sales; others remain more suitable for traditional sales.

Many successful purely virtual companies deal with digital products, music,

movies, education, communication, software, photography, and financial

transactions. Examples of this type of company include Amazon.com, Google,

E-Bay and Paypal. Products less suitable for E-Commerce include products

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that have a low value-to-weight ratio, products that have a smell, taste, or

touch component, products that need trial fittings most notably clothing and

products where color integrity appears important. Nonetheless, clothing sold

through the internet is big business in the U.S.According to eMarketer’s

annual report in 2006 the E-Commerce market size in Europe has grown to

106 billion ($133 billion). Analysts say that it is very likely to go on increasing

and display a very fast rate of annual growth  up to 25%. The situation will

best able for at least five years and the market will reach the point of 323

billion ($407billion) by 2011.Britain, France and Germany prevail in the

European E-Commerce market. These countries have the largest share in the

total figures transactions  up to 72%. British E-Commerce market ranks

first and analysts believe it will reach $114 billion in 2011, which is 41%

higher than the figures of 2006. Germany holds the second place. However, it

is first in the number of online-customers  there are as many as 3 million.

Some researchers also note that in the next five years the European market

might increase significantly due to the E-Commerce growth in the countries

like Italy, Holland and Spain. A wide range of goods and services can be sold

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through the Internet. A large piece in this pie is held by Information

Technology. However, the share of other niches (for instance, traveling and

finance) is unexpectedly high. Real estate, computers, hardware and

software, tourism, and financial services comprise the top of the list.

The e commerce market size and trends -

Being honest, and being good stewards of the customers data.

Organizations that want to keep their customers or gain new ones try to get

rid of all mistakes and be more appealing to be more desirable for online

shoppers. And this is why many designers of web shops considered research

outcomes concerning consumer expectations. Research conducted by Elliot

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and Fogell (2000) revealed satisfactory and unsatisfactory customer

experiences.

User interface it is important to take the country and customers into

account. For example, in Japan privacy is very important and emotional

involvement is more important on a pension’s site than on a shopping site.

Next to that, there is a difference in experience: experienced users focus

more on the variables that directly influence the task, while novice users are

focusing more on understanding the information. There are several

techniques for the inspection of the usability. The ones used in the research

of Chen & Macredie (2005) are Heuristic evaluation, cognitive walk through

and the user testing. Every technique has its own (dis-)advantages and it is

therefore important to check per situation which technique is appropriate.

When the customers went to the online shop, a couple of factors determine

whether they will return to the site. The most important factors are the ease

of use and the presence of user-friendly features

Advantages

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Convenience Online stores are usually available 24 hours a day, and many

consumers have Internet access both at work and at home. Other

establishments such as internet cafes and schools provide access as well. A

visit to a conventional retail store requires travel and must take place during

business hours. Searching or browsing an online catalog can be faster than

browsing the aisles of a physical store. One can avoid crowded malls

resulting in long lines, and no parking. Consumers with dial-up Internet

connections rather than broadband have much longer load times for

content-rich web sites and have a considerably slower online shopping

experience. Some consumers prefer interacting with people rather than

computers because they find computers hard to use. Not all online retailers

have succeeded in making their sites easy to use or reliable. On the other

hand, a majority of stores have made it easy to find the style one is looking

for, as well as the price range that is acceptable making the shopping

experience quick and efficient. The internet has made shopping an almost

effortless task. In most cases, merchandise must be shipped to the

consumer, introducing a significant delay and potentially uncertainty about

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whether or not the item was actually in stock at the time of purchase. Most

successful sites will say whether or not a product is in supply Bricks and clicks

stores offer the ability to buy online but pick up in a nearby store. Many

stores give the consumer the delivery company's tracking number for their

package when shipped, so they can check its status online and know exactly

when it will arrive. For efficiency reasons, online stores generally do not ship

products immediately upon receiving an order. Orders are only filled during

warehouse operating hours, and there may be a delay of anywhere from a

few minutes to a few days to a few weeks before in-stock items are actually

packaged and shipped. Many retailers inform customers how long they can

expect to wait before receiving a package, and whether or not they generally

have a fulfillment backlog. A quick response time is sometimes an important

factor in consumers' choice of merchant. Customers can choose the type of

shipping they want from overnight, to a few days. The quicker the delivery

the higher the shipping cost. A weakness of online shopping is that, even if a

purchase can be made 24 hours a day, the customer must often be at home

during normal business hours to accept the delivery. For many professionals

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this can be difficult, and absence at the time of delivery can result in delays,

or in some cases, return of the item to the retailer. Automated delivery

booths, such as DHL's Pack station, have tried to address this problem. When

shopping in a retail store, customers can handle and inspect the actual

product before they purchase it.In the event of a problem with the item - it is

not what the consumer ordered, or it is not what they expected - consumers

are concerned with the ease with which they can return an item for the

correct one or for a refund. Consumers may need to contact the retailer, visit

the post office and pay return shipping, and then wait for a replacement or

refund. Some online companies have more generous return policies to

compensate for the traditional advantage of physical stores. For example,

the online shoe retailerZappos.com includes labels for free return shipping,

and does not charge a restocking fee, even for returns which are not the

result of merchant error. In the United Kingdom,

Online shops are prohibited from charging a restocking fee if the consumer

cancels their order in accordance with the Consumer Protection (Distance

Selling) Act 2000.Information and reviews Online stores must describe

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products for sale with text, photos, and multimedia files, whereas in a

physical retail store, the actual product and the manufacturer's packaging

will be available for direct inspection (which might involve a test drive, fitting,

or other experimentation).Some online stores provide or link to

supplemental product information, such as instructions, safety procedures,

demonstrations, or manufacturer specifications. Some provide background

information, advice, or how-to guides designed to help consumers decide

which product to buy. Some stores even allow customers to comment or rate

their items. There are also dedicated review sites that host user reviews for

different products. In a conventional retail store, clerks are generally

available to answer questions. Some online stores have real-time chat

features, but most rely on e-mail or phone calls to handle customer

questions.

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Price and selection one advantage of shopping online is being able to quickly

seek out deals for items or services with many different vendors (though

some local search engines do exist to help consumers locate products for sale

in nearby stores). Search engines, online price comparison services and

discovery shopping engines can be used to look up sellers of a particular

product or service. Shipping costs (if applicable) reduce the price advantage

of online merchandise, though depending on the jurisdiction, a lack of sales

tax may compensate for this. Shipping a small number of items, especially

from another country, is much more expensive than making the larger

shipments bricks-and-mortar retailers order. Some retailers (especially those

selling small, high-value items like electronics) offer free shipping on

sufficiently large orders.

Online Retailing in India: Opportunity of the Future

The Indian B2C/C2C e-commerce sector has grown rapidly in the last 5 years

to reach USD11Bn in 2013 (Fig 2). This segment is expected to grow to USD

60Bn by 2017, making India the fastest growing e-commerce market in the

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APAC region. The major factors driving this growth are decreasing cost of

devices (PC & mobile), increasing internet penetration, more payment

options backed and lastly changing consumer preferences.

India has the third largest internet user base in the world behind China and

US and is expected to overtake the US in the next 2-3 years. While it took a

decade for the number of internet users in India to move from 10 million to

100 million, the subsequent leap to 200 million happened in a mere three

years (Fig 3). This accelerated pace of growth is expected to continue and to

be bolstered by the number of users accessing the internet from their mobile

devices, estimated at 110 million users as of October 2013 and growing

rapidly. This rapid spread of mobile internet, especially of smart phones

could unlock a significant market beyond the Tier 1 cities for the online retail

segment.

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Online Retailing in India: Opportunity of the Future

The current business environment in India has the potential to enhance the

growth of the online retail in India. Some of the key factors that can

contribute to the growth of online retail in India include

a) Increase in the number of Internet users and online buyers According to

Google, India now have around 200 million internet users which is expected

to reach 500 million by 2018. Every year there is an estimated increase of 5

million internet users every month. One of the key factors contributed to the

increase in internet users is the spread of broad band connectivity across the

country. In 2013, the broad band connectivity is around 15.13 million.

Government is talking initiatives to increase it by 214 million broad band

connections by 2014. This will enhance the accessibility of internet for

common people. Forrester’s Asia pacific retail forecast predicts that online

buyer population will reach 39 million by 2014 and 128 million by 2018 which

can stimulate the growth of online retailing in India.

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b) Smart phone revolution and Mobile Internet India is one of the markets

which is witnessing growth in smart phone customers. In 2013, there were

51 million smart phone users in India which is expected to reach 104 million

by 2014. But this forms about 10 per cent of the total mobile users currently.

The availability of cheap smart phone can enhance the growth rate in future.

Access to 3G and 2G mobile data networks and availability of cheap smart

phones can enhance the customer transaction using mobiles. Most of the

online retailers are developing their mobile applications to enhance the

shopping experience. Amazon came up with their own 3D smart phone- “Fire

phone” to enhance the mobile shopping experience of their customers. If we

compare the mobile internet users we can observe increasing trend with

respect to mobile internet users. According to 2015 projection, out of 300

million internet users 200 million users will be accessing internet using

mobile phones which can enhance E commerce opportunities in India.

INTERNET USERS MILLION

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INTERNET USERS MOBILE INTERNET

USERS

c) Increase in transaction by Debit cards, Credit cards, Net and mobile

banking Retail electronic payments was around INR 33.8 lakh crore in 2013

compared with INR 50,000 crore in 2004. Credit card payments has grown

seven times during this period and reached INR 1.2 lakh crore in 2013. In the

case of Debit card transaction there was an increase in 15 times which is

valued around INR 74,300 crore in 2013. If we analyse the trend electronic

transaction has increased during 2013 which forms 57 % of banking

transaction compared with 43% of paper transaction. There was an increase

in registered internet banking users in India during 2013 which was around

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35 % for public sector banks 25 % for private sector banks and 5% for foreign

banks compared with 2012. But still Internet banking transaction forms 2-8%

of total banking transactions for all Indian banks. Mobile banking is emerging

in India which witnessed a growth with 30 million users in 2013 compared

22.51 million users in 2012. From these trends we can conclude that Indian

customers are gradually changing with respect to the way they do financial

transactions. Credit, Debit cards and Net banking can facilitate quick and

convenient transaction for customers which can augment the growth of E

commerce in India. With the emergence of secure transaction methods like

two factor authentication, One Time Passwords(OTP) and payment gateways,

consumer’s preference to shop and do financial transactions online has

increased. This can enhance online retailing because of enhanced security

and easiness in doing the transaction. Some of the retailers are providing the

facility of cash on delivery options (COD) to customers those who are

sceptical about the secure transactions in online platforms. This forms more

than 60% of the total ecommerce transaction in India. Banks and ecommerce

sites are taking proactive steps in enhancing on-line transactions by

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addressing security and other issues with respect to online transactions.

Around INR 74,300 crore in 2013. If we analyse the trend electronic

transaction has increased during 2013 which forms 57 % of banking

transaction compared with 43% of paper transaction. There was an increase

in registered internet banking users in India during 2013 which was around

35 % for public sector banks 25 % for private sector banks and 5% for foreign

banks compared with 2012. But still Internet banking transaction forms 2-8%

of total banking transactions for all Indian banks. Mobile banking is emerging

in India which witnessed a growth with 30 million users in 2013 compared

22.51 million users in 2012. From these trends we can conclude that Indian

customers are gradually changing with respect to the way they do financial

transactions. Credit, Debit cards and Net banking can facilitate quick and

convenient transaction for customers which can augment the growth of E

commerce in India. With the emergence of secure transaction methods like

two factor authentication, One Time Passwords(OTP) and payment gateways,

consumer’s preference to shop and do financial transactions online has

increased. This can enhance online retailing because of enhanced security

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and easiness in doing the transaction. Some of the retailers are providing the

facility of cash on delivery options (COD) to customers those who are

sceptical about the secure transactions in online platforms. This forms more

than 60% of the total ecommerce transaction in India. Banks and ecommerce

sites are taking proactive steps in enhancing on-line transactions by

addressing security and other issues with respect to online transactions.

Currently travel has more than a 70 percent share of the B2C e-commerce

market (Fig 4), which is likely to come down with online retail gaining

prominence (Fig 5). Industry experts believe that this ‘second-coming’ of the

online retail sector in India is here to stay. This confidence comes from the

much better eco-system that prevails in terms of consumer acceptance and

the infrastructure to deliver. And there is the successful example of the air

and train travel segment where online booking has permeated across socio-

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economic strata. Experts also point out that with the huge mobile subscriber

base and fast increasing base of mobile internet users, the Indian online

retail market could potentially take a non-linear growth in the years to come

(Fig). This sentiment is shared by PE/VC community which has backed the

India online retail market, by investing nearly USD2Bn in various online

businesses by first half of 2014. In the recent past, significant additional

investments have been shared publicly, the USD1Bn funding raised by

Flipkart, Amazon’s planned USD2Bn investment and the proposed

USD650Mn funding to be raised by Snapdeal.

Continuing Challenges for the Indian Online Retailer

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It is interesting to note that the access to capital has also led to Indian online

retailers looking to buy market share. This has been especially true for the

large players like Flipkart, Amazon, Myntra, Jabong and Snapdeal. Players

have indulged in aggressive pricing backed by massive advertising spends.

Everyone is wanting to be the ‘last-man standing’ in this bloodbath. The PE

players continue to back their chosen players in this sustenance game with

repeated capital infusions.

Another peculiar challenge in the Indian online retail market is the majority

share of Cash-on-Delivery (CoD) amongst payment options. While CoD has

definitely enabled the explosive growth of online retail, it has also presented

multiple challenges like additional cost, longer revenue realization cycle,

increased supply chain complexity, and fraud risk. Current market structure

and consumer purchase patterns indicate that CoD is not likely to go away in

a hurry. However, its share is likely to reduce gradually, with increasing

penetration of credit/debit cards coupled with its online usage and greater

consumer confidence in such transactions.

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The Indian online retail market has had a dream run in recent years when it

comes to transaction value, however significant challenges still remain. These

challenges are expected to drive consolidation in the market. We strongly

believe that Flipkart’s acquisition of Myntra is potentially the start of this

consolidation phase. There will be many more; the question is when and to

what extent.

While developing this PoV, we met many industry experts who suggested

that Indian online players should study global learnings in their attempt to

create a sustainable business model. This is based on the premise that

market characteristics of online retail are more similar across geographies as

compared to brick and mortar retail. Thus, looking at how online retail has

shaped up globally and studying relevant success factors could provide

significant insights.

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Increasing Share of Online in the Global Market

Online retail is the fastest growing channel globally, as confirmed by the

Planet Retail’s retail panel data (Fig 7). The online channel is expected to

grow at a much faster rate vis-avis more established channels. The channel is

expected to account for 10.1% of overall retail sales in 2018, up from 6.5% in

2013, and 3.5% in 2008.

Developed markets like the US already observe 7.7% retail sales via the

online channel and expect it to reach 10% by 2017.

In China, online retail accounts for 5% of the total retail sales and in absolute

terms, it is expected to have overtaken US online retail very shortly. On a

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broader note, e-tailing is estimated to have added 2% to China’s private

consumption in 2011 and expected to add 4-7% by 2020. These are

significant metrics when it comes to stimulating demand from such a huge

base.

Research indicates that global e-retailers have not been able to make much

headway in developing markets like China, Brazil, and Russia. In these

geographies, domestic players have emerged as market leaders by leveraging

their superior understanding of consumer needs.

Category-Level Learnings in the Global Market

The sizeable categories sold online are Consumer Electronics and Apparel,

accounting for roughly 40% and 45% in the US and China, respectively. And

as expected, for the books category, 45% of retail sales in the US come from

the online channel.

It is interesting to note that globally, the share of the online channel in food

& grocery (F&G) retail is negligible. However there are certain hybrid

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concepts like the ‘Drive Format’ which is a form of ‘Click & Collect’ gaining

ground in markets like France. This format was nearly a Euro 4Bn market in

France in 2013 having grown at 75% YoY. This concept looks to target young

shoppers who are looking for convenience because of hectic lifestyles (Box 1:

Drive Format).

Another interesting trend is the performance of niche online retailers in the

developed markets. These players have the tendency to bypass the large

online retailers. Wayfair is a great example from the US market, with

revenues nearing $1Bn and profitability achieved in a little over 10 years.

Wayfair started out by offering niche home products on 200 absurdly named

narrow sites such as everygrandfatherclock.com and allswivelbarstools.com.

They have recently merged under the brand Mayfair and are eyeing the

$500Bn home goods market in the US.

Omni channel retailing the Way Ahead

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Brick and mortar retailers are increasingly realizing that the physical store is

just one part of the overall consumer experience. Access to the internet and

mobile devices has enabled consumers to research and shop anytime,

anywhere. This has resulted in a critical need for retailers to take a holistic

view of the various channels.

This new concept of retailing which integrates and aligns all channels of

consumer engagement (stores, e-commerce, mobile apps, and social media)

is called Omnichannel retailing. This talks of a flexible and seamless shopping

experience to consumers, irrespective of which of the channels is being used

to engage with the brand.

The table on the right lists out the Top 20 online retailers globally (Fig 8).

Interestingly 14 of them are brick and mortar retailers. And each of them has

shared their intent to invest in the online channel.

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CHALLENGES FOR ONLINE-RETAILERS IN INDIA

Even though India online retailing has growth prospects, there are multiple

challenges for e-retailers in India market. It includes

a) Logistics

Effective logistics play a key role in determining the operational success of e-

retailers. If we look at the India our country is large and fragmented with

poor infrastructure facilities. So timely delivery and other priority services are

the biggest challenges for online retailers in our country. Moreover cost of

logistics in India is high due to lack of adequate infrastructure. This has

forced some of the retail players like Flipkart and Amazon to build their own

logistics arms. Flipkart has e-kart logistics which takes care for their delivery

process. Some of the online retailers are tied up with logistics companies for

fulfilling customer orders. One of the biggest problems faced by logistic

companies is the limited airline feet size of logistic companies. We look at the

Indian scenario we have limited fleet of freight carriers which can hinder the

priority services like same day delivery for customers.

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Air fleet size comparison Courier service providers of US and India

Another important drawback is the limited technology investments and

developments in Indian

Logistics sector. If we look at developed countries there is huge investment in

technologies like GPS,

RFID technology to enhance the tracking of shipment and delivery of

customer orders.

b) Poor Internet speed one of the biggest problems India facing is the slow

speed internet connection which can affect the prospects of online retail in

long run. The average internet speed is less than 1 mbps which makes it one

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of the low ranked nations in global scenario with respect to internet speed.

This can affect the accessibility to shopping sites and online transactions

which will in turn reduce the customer buying through online portals.

c) Customer Trust and Loyalty

Some of Indian online retailers lack trust among the customers. Even though

we have trusted players like Flipkart, Myntra and Jabbong, other retailers

were not up to the mark compared with other players. The entry of foreign

online retailers like Amazon has forced Indian players to enhance customer

loyalty. Flipkart has started an initiative called Flipkart first which provides

same day delivery, priority customer services, free shipments and exclusive

offers.

d) Overcoming touch and feel mental barrier of Indian customers Indian

customers prefer to touch and feel products before they purchase. The

biggest challenges faced by online retailers to overcome this barrier. Online

retailers are trying to overcome this barrier by adding more specifications

and information about products. They also share customer feedbacks to

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enhance the confidence of customers. e) COD and Returns management

Cash on delivery has emerged as the preferred mode of payment by online

customers. This has created certain critical issues for online retailers. Some

of the logistics providers levy extra charges from the customers which can

affect the retail business in long run. Delay in remittances of the Cash

collected by logistics providers from customers can reduce the working

capital for online retailers. Another important issue faced by online retailers

is the customer returns and how to handle it. Some of the logistics players

don’t have the capacity to handle the returns. More over this can create an

additional cost for the retailers which is an important issue faced by online

retailers. This has forced some of the retailers to start their own logistic arm

to address these issues in a better manner which can enhance customer trust

and convenience. Moreover this can provide the cost advantage for online

retailers in long run.

f) Complex tax regime

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One of the major constraints faced by e-retailers is the complex tax regime in

India. Non uniform VAT (Value added tax) are levied by different states. In

some case state governments charge VAT for products sold with in a state in

which warehouses are located. This has affected the cost for sourcing and

delivering for products and services for online retailers. Multiple point

taxation, Octroi and entry taxes are other major drawbacks in India which

can affect the prospects of online retailing in India. It also forced some of the

retailers to open warehouses in different states to reduce the entry and

other taxes. Online retailers looking at implementation of uniform Goods and

Services tax (GST) which can add operational convenience to online retailers.

g) FDI policy in B2C ecommerce

India’s FDI policy restricts 100 % FDI in Multi brand retail which is applicable

to e -commerce activities also. In online B2B e-commerce 100% FDI is

allowed but this is not applicable to B2C e commerce activities. Government

allowed 51 % FDI in B2C e-commerce for retailers with brick and mortar

operations. Currently most retailers are following a market place model in

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which online retailer provides a platform for potential buyer and sellers. This

can result in limited margins, restricted control over product, service and

speed of delivery. The restriction with respect to FDI is affecting the growth

and expansion plans of online retailers.

RESEARCH AND METHODOLOGY

RESEARCH METHODOLOGY

Research in common pursuance refers to a search for knowledge in a

scientific and systematic way for pursuant information on a specified topic.

Once the objective is identified that next step is to collect the data which is

relevance to the problem identified and analyze the collected data in order

to find out the hidden reasons for the problem. There are two types of data

namely.

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1. Primary Data

2. Secondary Data

1. PRIMARY DATA

Primary data is to be collected by the concerned project researcher with

relevance to his problem. So the primary data is original in nature and is

collected first hand.

Collection of primary data

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There are several methods of collecting primary data particularly in surveys

and descriptive researches. Important ones are as follows:

 Observation Method

 Interview Method

 Questionnaire

 4Schedules and

 Other methods which include

 Warranty needs

 Distributor audits

 Pantry audits

 Consumer panels

 Using mechanical devices

 Through projective techniques

 In depth interviews and

1) OBSERVATION METHOD:

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It is the most commonly used methods especially in studies relating to

behavioral sciences. This method implies the collection of information by

way of investigators own observation, without interviewing the respondents.

The information obtained relates to what is currently happening and is not

complicated by either the past behavior or future intentions or attitudes of

respondents.

2) INTERVIEW METHOD

The interview method of collecting data involves presentation of oral, verbal

stimuli and reply in terms of oral-verbal responses. This method can be used

through personal interview and, if possible, through telephone interview.

PERSONAL INTERVIEW

The method of collecting information through personal interview is usually

carried out in a structured way. As such we call this interview as structured

interviews. Such interviews involve the use of a set of predetermined

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questions and of highly standardized techniques of recording. Thus, the

interviewer in a structured interview follows a rigid procedure laid down,

asking questions in a given format and the order prescribed. As against it, the

unstructured interviews are characterized by flexibility of approach to

questioning. Unstructured interviews do not follow a system of pre-

determined questions and standardized techniques of recording information.

3) QUESTIONNAIRE

The researcher and the respondents do come in contact with each other if

this method of survey is adopted. Questionnaires are mailed to the

respondents with a request to return after completing the same. It is the

most extensively used method in various economic and business surveys &

research. Questionnaire to be used must be prepared very carefully so that it

may prove to be effective in collecting the relevant information.

Structured questionnaire

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Using structured questionnaire method, which contains close-ended

questions, collected the primary data with respect the problem chosen. The

questions have some options, from which the respondents have to choose a

choice. As the answers lie within a specified range they are called close-

ended questions.

Open-ended questions are those questions where no choices are given to

respondents and respondents are free to express their choice or answer.

The following sampling method was used.

Sampling:

A non-probability conclusive sampling method was used in the study for data

collection.

Sample size:

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The sample was taken from the universe on random sampling basis in Noida.

The sample size designed for this project is 100 keeping in mind the paucity

of time and also the customer base of the organization in the research area.

Research Methodology

A structured questionnaire was prepared and presented to the respondents

and related questions were asked. Questionnaires mainly contained close-

ended questions and a few open ended questions, to identify the reasons for

customer’s satisfaction & their dissatisfaction.

Secondary data

It is the data already existing, which has gone through some standard

analysis. Under the secondary data, the company’s annual reports,

broachers, pamphlets, newspapers, journals and internet were taken into

consideration.

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SCOPE OF THE STUDY

The scope of project work is to get the opinions from respondents on the

issues mentioned earlier.

RECOMMENDATIONS

Now a day’s customer wants to save their time from anything so they like to

buy things online but due to security reasons they don’t. So those companies

who are in the field of E-Tailing they should make secure the transactions

made by customer to win their faith.

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As we all know that India is a developing country and she is getting better

and better ever moment but still there are some fields where we are not as

good as other countries like USA, Britain, France, Germany etc. but we try to

use the same technology or facility over hear. We need to understand that

things which are successfully working over there will not work with same

quality and strength until Infrastructure for that service will not up to the

mark in our country.

Still Indian customers are not aware about this kind of facility is available to

them, they still like to buy things after visiting the shops. Companies which

are in that business need to increase awareness among people by

advertisement and customer should also be informed that how to purchase

goods online.

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Generally customer complains that most of the companies are failed to

provide products on time, they even not sure that whatever they ordered

will surely reached to them. So Delivery time should be taken into

consideration.

If any complain registered by the customer then it should be solved within

time and companies should try to find out quick way of solving the frauds

complains. It will help company to win the faith of customers.

The process of online purchasing should be simple and easier for customer so

that they can easily access or order whatever they want. So many customer

do not buy products from internet although they know that they can buy it

online and they have access too because they do not want to spend their

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time in finding the right product. They prefer to go to the market and buy it

because they know where they found it.

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CONCLUSION

Now a day’s fashion of E commerce is increasing day by day, youth are the

movers who want to try this facilities and in metro cities online buying is

increasing very rapidly. Now they use online banking facility, book their

movie ticket, railway ticket, recharge their mobile online. But in two tier

cities online facilities are not popular. They still buy railway ticket, movie

ticket with the help of broker or personally standing in a queue. One reason

is that they do not believe on these facilities due to some cases of leak of

personal data and second one is penetration of internet user is very low in

two tier cities.

Consumer’s preferences are changing rapidity and becoming highly

diversified. It is difficult for the retail stores to satisfy all the needs of the

customers. The most of the consumer’s want to get some attractive prices,

good schemes and offers on every purchases and a shopping comfort as well.

Those who are able to purchase their needs and want for a month in a bulk

prefers to go to the retail chains. With the help of online shopping facility

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retailer can fulfill the need and demand of their customers and able to

provide better services to their customers.In India online shopping is still not

a preferred way of shopping because customers are facing some problem

regarding fraud, privacy, hidden charges, on time delivery etc. Indians are not

so much techno savvy that help those who are ready to cheat with the

customers. Companies should need to promote or try to tell their customers

about online shopping facility so that those who are aware about this they

will use it at least once and those who do not know they will think about

using it. Companies need to find out that what type of problem customer are

facing while using online shopping facility and try to salve there problem so

that customer will find it easy in comparison to other way of shopping.

31Slowly-Slowly time will change as the internet uses are increasing. Future

of e retailing is bright in India and now slowly-2 people are changing their

perception and accept the changes comes in the buying process.

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BIBLIOGRAPHY

www.google.com

www.Ask.com

www.wikipedia.com

BOOKS –

1. AT Kearney (2013) – Global Retail ecommerce Index, AT Kearney, Inc., P1-

17

2. Arora, J. (2013), Prospect of E commerce in India, IOSR journal of

computer engineering, P 1-5

3. BW (2014) - The Marketing White Book -2014-15, Business World, P63-65.

4. CRISIL (2014) – e-tail eats into retail, CRISIL research, P1-14.

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5. E&Y & RAI (2014) – Pulse of Indian Retail Market, Ernst and Young LLP

Publications, Retailers

Association of India, P1-16.

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