effectiveness of e-commerce in the consumer goods market in india1.doc

8/14/2019 effectiveness of e-commerce in the consumer goods market in INDIA1.doc

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INTRODUCTION

The World Wide Web, being a subset of the internet tribute its achievements to MOSAIC, a

software product that provided users with the aptitude to easily access, point and clic setting! As

the World Wide Web achieved a high reputation around the globe, corporations started to

envisage the scope of the World Wide Web in various sectors! The buying and selling of

products and services has been prevalent in the business sector for decades now! There have been

several innovations in this sector in terms of the process of transaction! With internet booming to

its pea, the latest innovation in the process of buying and selling has been through the internet,

which is referred to as e"commerce! #lectronic commerce refers generally to all forms of

transactions relating to commercial activities, including both organi$ations and individuals, that

are based upon the processing and transmission of digiti$ed data, including te%t, sound and visual

images.(OECD, 1997)In the current competitive global maret, e"commerce and e"business

have essential elements of successful business tactic! Since the mid &'(s, the rise of the internet

has been astonishing which resulted in a drastic change in the manner of performance of

individuals and organi$ations! Internet has become the newest and the most effective till date

channel for business corporations to communicate with their customers!

#"commerce involves the transfer of data used by any form of business using the internet! #"

commerce involves the utili$ation of digital information to identify the needs and preferences of

each customer and partner to modify product and services thereby offering products and services

as fast as possible! These ind of modified services offer businesses the prospective of

augmenting sales and revenue, decreasing e%penses, and in the process building up customer and

cohort relationship! It offers customers the privilege of being able to perform electronic

transactions of goods and services with no hurdles whatsoever in terms of point in time or


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/ITERTURE REVIE!

#"commerce is the use of electronic communications and digital information processing

technology in business transactions to create, transform, and redefine relationships for value

creation between or among organi$ations, and between organi$ations and individuals! +na,

2003 The booming e"commerce has taen the business maret by storm such that an innovative

means of transacting services and goods using the internet has become possible thus maing it

the virtual maret place of the globe! In a broader sense, e"commerce involves not only buying

and selling through the internet but also about servicing customers, collaboration with business

partners and conducting business internally or within the organi$ation!(Tu*"an, 2002) Owing

to its adoption by a vast array of global organi$ations, there e%ist numerous definitions for e"

commerce! -or e%ample, the .lobal Information Infrastructure Committee describes e"commerce

as the /economical commotions involving by employing electronic communications with the aid

of which people can buy goods, publici$e products and reconcile! Intel defines it as electronic

maret 0 electronic trade 0 electronic service! I1M defines it as information technology 0 web 0

business! 23(s version states that it is an electronic means of achieving business! (#n, 2009,

.7) within the recent years, there has been a highly remarable fluctuation in the stoc maret

booming up and crashing down! In the present scenario, it has reached a stage where it has

become highly decisive to understand e"commerce and the business aspects and technology that

is necessary for implementing a successful business organi$ation!(*$* an Ell#4, 2001)

#"commerce refers to the paperless, e%change of business information using electronic data

interchange, e"mail, electronic bulletin boards, electronic fund transfers, internet and other

networ"based technologies! (5aa $% al., 2006, .1) #"commerce facilitates swift,

economical, universal and protected way of inter"enterprise group effort for maing and sales of


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products, in order to accomplish improved customer value! (Da8#*au, 2002 a4 '#%$ #n l-

#*#, 200) #"commerce basically involves4

5a6 Online shopping4 The e%tent of information and actions that endow the customer with all

essential facts and figures in order to conduct business and mae a nowledgeable trade

choice!

5a6 Online purchasing4 The e%pertise infrastructure for the trade of data and procure of a

merchandise over the web. (R4$n, 2002, .)

#"commerce can be taen as a group of networs, Intranet or the private to the organi$ation,

e%tranet also private with business partners7 and the Internet which is the public and global

networ open to everybody. (/a*$n'$, 2000) #"commerce has become the inevitable

reuirement for international businesses owing to its low cost, fle%ibility, broad overlaying and

comprehensive nature! In short, e"commerce has become a blend of information technology and

business functions! (#n, 2009) #lectronic commerce is about doing business electronically! It

is based on the electronic processing and transmission of data, including te%t, sound and video! It

encompasses many diverse activities including electronic trading of goods and services, online

delivery of digital content, electronic fund transfers, electronic share trading, electronic bills of

lading, commercial auctions, collaborative design and engineering, on"line sourcing, public

procurement, direct consumer mareting, and after"sales service! It involves both products 5e!g!

consumer goods, speciali$ed medical euipment6 and services 5e!g! information services,

financial and legal services67 traditional activities 5e!g! healthcare, education6 and new activities

5e!g! virtual malls6! (Eu*$an C#44#n, 1997)

The organi$ations that have succeeded are those which have strategically utili$ed the strengths

and opportunities offered by the e"commerce to its optimum use! Their strategies include putting


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together clients, along with generating revenue and inventory! In terms of customer satisfaction,

it offers the customers the advantage of controlling any transaction! -urther advances in web"

based technologies have sustained the growth of e"commerce! Automation and delegation

technologies will tend to decide the future of e"commerce in the long run! -or instance, with the

emergence of software programs that can mae it possible for consumers to conduct automated

searches and price comparisons along with online sellers to mae out visiting customers, access

bacground information on them, and accordingly ad+ust their price and offerings, it is a clear

open world to the consumers! Technologies have been created that tend to mae decision on

behalf of individuals, negotiate with other programs and participate in online marets! (Vulkan,

2003) This provides businesses new prospects in terms of establishing their name across the

globe! 8owadays customers tend to mae online purchases owing to the considerable amount of

provisions it gives the customers! The better the e"commerce performance of a business, the

better will be its customer relationships!

5ENE;IT< O; E-COMMERCE

1enefits of e"commerce include4

9 #conomic gain by lowering the labor costs involved!

* #ase of time with more rapid deliverance!

: 3roficient handling of product management and customer handling!

; Convenience and developing good relationship with trading cohorts( results in an

established relation between the parties involved!

The e"commerce has taen over the maret transactions at a fast pace thus becoming the most

important virtual place for business transactions! Ma+or players in this sector include Ama$on,

and ebay who have done their bit in terms of attaining ma+or maret share in online business!


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tend to remember the shopping preferences of their users in order to go over similar

purchases!

>! )iminish the travel instance and e%penses4 In contrast to physical retail stores, e"

commerce provides users the option of visiting the same store practically with few clics

of a button!

?! #ndow with evaluation of shopping in different stores4 #"commerce facilitates the

customers to browse various shopping websites and find the best price they can get for

the item they are looing for!

@! 3rovides discounts and offers to customers4 Online shopping enables customers to obtain

discounts and offers far better than they receive in physical retail outlets which can be

redeemed easily by the mere clic of a few buttons!

! #ndows with copious information4 #"commerce has the facility to eep customers

informed about each and every product line at no e%tra cost in setting up or maintaining!

&! 1uild mared communication4 1y using the data about the customer given during

registration, it is possible for the e"commerce websites to send relevant information to the

customer regarding their search and eep them informed about related products as well!

9'! -unctioning round the cloc4 A characteristic feature of e"commerce websites involve

their ease of functioning *; hours a day, :?> days a year thus providing convenience to

the customers to mae a purchase whenever they lie and the online retailer to receive an

order at any time of the day!

99! .enerate marets for niche items4 A convenient section that the online retailers provide

for customers is in terms of purchasing niche items! In contrast to the physical retail

stores, where it is difficult to find out outdated items, the virtual world provides the ease

of locating and purchasing them with a mere few clics on the mouse! +u*ana, 2011!


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INDIN RETI/ INDU


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shopping industry! A few aspects that wor against the e"commerce maret include non"

availability of product demo, no option for bargaining, holdup in delivery, insecurity of

creditable of shopping portal, not sure of product uality and low retail management sills!

+laa, 2010

esearches suggest that the Indian online retail is a prosperous sector that has tremendous scope

for use and development! The online means provide various aspects that shall redeem favorable

for the retail industry which comprise of high customer penetration, augmented visibility, and

suitable functions! +Naa*au, 2010 Although compared to the Western countries, India is still

considered to be in its infant stage of development! 1ased on previous researches, it has been

identified that, according to the Indian #commerce eport released by Internet and Mobile

Association of India 5IAMAI6 and IM1 International, the total online transactions in India was

s! @'' crores 5appro% D9!@> billion6 in the year *''?"*''@ and e%pected to grow by :'E to

touch &*9' crores 5appro% D*!9> billion6 by the year *''@"*''! According to a McFinsey"

8asscom report the e"commerce transactions in India are e%pected to reach D9'' billion by the

*''! +an#, 2011

;OCU< O; T@E AOVERNMENT O; INDI ON E-COMMERCE

1eing aware of the augmenting e%ploitation of the e"media and the online scams, the

.overnment of India has passed the Information and Technology Act in order to verify business

dealings done via the e"media and in the process mae #"commerce process secure and

consistent! The law has been launched with the substantiation of the e"records! Moreover the

.overnment of India has settled on to enforce service ta% on any deals done via #"commerce


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which shall have a net result of maing the whole process of online shopping costly! A set of

means to catch the attention of the Indian online customers include the following4

/.oods should have value for the customer along with uality!

Security is promised!

Selling 1rand articles!

#stablishing trust and winning confidence!

3roviding easy guidance!

Clear information regarding delivery time!

Articles ordered and the article delivered should not vary!

.iving discount offer and other gift items!


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9 The hesitancy on part of the customers to register themselves at a particular online site!

This accounts for the statistics that state the reason for *:E of customers to give up even

before they start!

* Ambiguity in delivery time!

: )ownloading process being too tedious!

; Indian consumers are more prone to buy goods only after feeling the goods! This

disadvantage can be eliminated only after established companies enter into the

#"commerce on which people have belief upon!

> Indian customers are very need driven in comparison to the Western customers who are

impetuous buyers!

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3rovide a clear picture of customer relationship!

Allow customers to assist themselves!

-acilitate customers to perform their +ob!

)istribute personali$ed checs!

3romote community! ("l, 199B)

Barious literatures wors suggest that owing to the rising benefits that e"commerce endorse

organi$ations are drawn towards implementing the strategy in their organi$ations for further

success in their ventures! This resurgence is triggered by the lies of economic forces, customer

relation focus and technology driven digital convergence (alak%a an !#n4%n, 1997)

E'n#' &*'$4: With companies striving hard to design techniues to lower cost and remain

ready for action, organi$ations are more than attracted to the economic efficacies in the form of

low priced technological infrastructure put forward by e"commerce! This shall aid the company

in lowering the cost trouble with regards to technological improvements and obsolescence, cost

effective and e%act e"transfers with suppliers, the low price involved in global allocation of

information and advertising and aptitude for organi$ations to offer low priced customer service

options to e%clusive trade ban divisions and telephone call centers! There lie both internal as

well as e%ternal economic encouraging forces! The instantaneous submission of e"commerce is

the inner incorporation of company operations! #%ternal incorporation shapes the ma+ority set"up

of suppliers, government agencies, large corporations and independent contractors into a

unified community with the aptitude to correspond across any computer platform! (alak%a

an !#n4%n, 1997)


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Ma*k$%#n an 'u4%$* *$la%#n &*'$4: Since the customer online traffic is sectioned across

various websites, it has become immensely competitive for even little allocation of online visits

by customers! (M$$k$*, 1997) This happens in spite of the proponent increase in the number of

online users and the instant spend online! +AVU !!! U4$*4 4, 199B The advertisers

on the web spots comprehensive and in the process aid advertisers in drawing the attention of at

least a few of the publisher spot(s traffic! Web advertisers attempt to invite customers to visit the

publisher(s web spot to analy$e their ads and to clic on them to interrelate with the advertising

data! #ven though this is the case, they are still hesitant to entrust advertising budgets owing to

the unpredictability and the shortcoming of measurability of consumer response to their ads at

publisher(s web sites! With the rapid alteration in products and buying maret it is vital that

mareters mae use of technology to build up low priced consumer prospecting techniues, set

up close interaction with customers and in the process build up customer loyalty!

T$'nl> an ##%al 'n8$*$n'$: The persistent advancement of technology, the

introduction of multimedia standards and the swing in handing out computing and

internetworing are endowing with the rare power of digital convergence!

On assessing the proposition of influence of different forces upon e"commerce, all the above

mentioned aspects 5economic forces, mareting forces and digital convergence6 have swayed the

relocation of industries to mae the most out of innovative openings which comprises of the new

service delivery channels, growth of new marets for accessible products and the progress of

innovative data based product for the internet environment! )igital convergence involves the

restructuring of the competitive environment for telecommunication services around the globe!

2ence in order for companies to mae use of the various aptitudes of e"commerce and in the


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process to mae it an industrial power toll for business it is necessary to have a better nowledge

of the technological agenda!

The proposition of the internet has made two things possible, one of which is the Internet maing

available an ideal standard for combining buyers and sellers from around the globe and the other

being the Internet presenting an e%ceptional means of evaluating prices and gathering necessary

information! This being the case, the price dispersion is widespread on the web as it in the

outside shopping world! +E'n#4%, 1999

#valuating the web to be a allocation channel, the Web have power in terms of4


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The change in channel power embrace significant proposition for consumer involvement in the

mareting process! -or instance, consumers may cooperate with each other not only in terms of

idea creation and devising of the product but also in mareting communication itself which is

attributed to the interactivity in the Web that provides consumers much higher power of the

message! These ind of control over messages apparent itself in astounding innovative means as

in the case where it is practical for consumers who are concerned about maing any ind of

appliance purchase to show their attention and implore open tenders from other organi$ations!

(Cu%l$*, 1990) The e%act inspiration behind building up an internetwor of Web based

computers was to mae the physically separated computers symboli$ing different proposals to

relate and communicate so as to cost"effectively share valuable reserves! (@a&n$* an />n,

199? R"$*%4, 19BB) This led to the progress of the internet in a rich and stimulating ambiance

of rational interest promoted in an unconstrained and innovative environment! (/#'kl#$*, 19BB

M#>a, 1990)

The tough protrusion for the augmentation of e"commerce is improbable to be feasible unless

there is no provision for online customers to shop with confidence! )eveloping the digital

economy involves giving surety to the customers in terms of confidentiality regarding their

communication, guarding their personal data, maing sure that the customers receive what they

pay for and overall the basic infrastructure is secure under any circumstances whenever they

shop on the internet! (U.< A8$*n$n% !*k#n A*u n El$'%*n#' C$*'$, 1999) A

consumer familiari$ed information confidentiality model will show the way to priceless

e%change association with significant advantage for consumers and organi$ations doing business

on the internet! (!an $% al, 199B) Consumers are in command of their personal data" a concept


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that is reliable with the tailoring of customer needs in online environments! Organi$ations will be

recompensed with consumer belief, the compliance to unveil, and immense levels of constancy!

In order to smooth the progress of the commerce on the internet, the private sector must show the

way from front, unnecessary constraints on e"commerce should be evaded, the e%clusive

eminence of the internet and e"commerce over the internet should be assisted on a global basis!

(T$ !#%$ @u4$ R$*%, 1999) The assignment tends to share an insight into the analysis of

e"commerce on the internet from an Indian perspective!


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MET@ODO/OA=

The methodology adopted in the research tends to outline the current status of the e"commerce

and its impact on the Indian retail sector! The ob+ective of the research is to e%amine the

approach of organi$ations in doing business on the interne and the effectiveness of e"commerce

in the consumer goods maret in India! The principle problem related to the research is to

identify the effectiveness of e"commerce in India! 2ence the researcher has stuc to adopting a

ualitative survey method in order to collect the necessary data! 1ased on the current trend of

maret research, collection of data in the form of survey is focused on critical methodological

limitations! (/ann an


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The self administered uestionnaire will be advanced to the employees of eliance retail limited

in Fo$hiode, Ferala having wor power of >'' employees and the company being a high

profile player in the retail sector in India! The responses obtained from the employees tend to aid

the researcher in arriving at an unbiased conclusion regarding the topic under study! The

uestionnaire aims to determine the nowledge of the employees in terms of their association

with the internet in their day to day business activity! In addition, a structured interview will be

conducted with the management in terms of attaining a clear cut picture regarding the topic

under study! The uestionnaire thus developed will be consulted with my dissertation supervisor

and then put into practice accordingly! The pro+ect plan includes4

An opening investigation of subsisting and related sub+ects of e"commerce!

Investigation involving gathering of data and analysis of option going after alternate

viewpoints, taing into account of the facts already nown!

Creating other routes of act as reuired!

Adding suitable recommendations if necessary! (ank#', 1991)

The value of a structured uestionnaire is that4

9! It allows standardi$ing the uestions to such an e%tent that a more numerate, statistically

based analysis is possible!

*! .reater testing of hypothesis is done!

:! #%plicit feelings of ambiguity!

;! Allows respondents more time to thin! +u*$l V#'ul$4'u, 2011


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The uestionnaire comprises of 9' uestions in total each signifying its importance to the

research study in its own way! The first uestion of the self structured uestionnaire tends to

measure the business activity of the participants thereby to assess the impact and influence of

internet on that particular industry! The second uestion can be considered as an awareness of the

si$e of the company among the employees regarding the man power resources in the company

under study! It mainly measures the employee(s perspective on how decisive has e"commerce

become for the company! The third uestion tends to measure the depth of e"commerce in the

organi$ation under study! The fourth uestion is an implication that is raised regarding the

purpose of a company web presence! The fifth uestion involves a


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sample, who are to provide the necessary data from which conclusions are drawn, involving a

larger group, the population whom these samples represent!(ank#', 1991)

The data collection and analysis method involves a simple, clear"cut approach involving a survey

uestionnaire forwarded to >' staff members of retail giants eliance retail limited in

Fo$hiode, Ferala! The responses thus collected were compiled to arrive at a reliable conclusion

regarding the topic under study! -or the purpose of obtaining credible results, special care was

taen in maing sure that there was no bias involved in collecting and gathering the responses so

that the interpretation and following conclusion will not be affected in any way whatsoever! )ue

to the structured nature of the survey uestionnaire employed in the research each participant

too around 9'"9> minutes to complete the uestionnaire!

/IMITTION< O; T@E RE


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of less sill and sensitivity in administration compared to in"depth interviews thus putting a

shadow of doubt with regards to its reliability! (ank#', 1996)In addition to that the e%isting

economic condition prevalent in India also reuires more than enough contemplation! 1esides all

that, the survey method has a significant drawbac of not being able to generate the same end

result every time!

Albeit, the researcher(s selection of the current techniue for conducting research in the topic

under study is acceptable in terms of practicality with scope for including uestions in the

uestionnaire that shall suit the respondents predilection thus allowing the researcher to gain

much more unbiased responses that shall serve in attaining the ob+ectives of the research! In spite

of the valuable efforts from the researcher in trying to avoid even the minutest of errors

whatsoever, but since the researcher is convinced that the selected survey uestionnaire

methodology shall aid the researcher in obtaining unbiased answers from the respondents thereby

+ustifying its purpose in the research study! (R"4n, 1993)


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RE


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;#u*$ 1. Ma#n "u4#n$44 a'%#8#%>

E-COMMERCE CONNECTED TO 5U

computers! 8one of the responses were recorded for $ero computers! The responses obtained are

represented as follows4


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;#u*$ 2. Nu"$* & 'u%$*4 #n8l8$ #n %$ "u4#n$44.

EFTENT O; GG/ICTION O; E-COMMERCE IN T@E 5U


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respondents opted for e"mails! The others option included leisure, for which : of the respondents

opted to! The above obtained results is depicted as follows4

;#u*$ 3. l#'a%#n & $-'$*'$ #n %$ "u4#n$44

INTERNET U hours! The responses thus obtained were depicted as follows4


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;#u*$ . E-'$*'$ u4a$ a% "u4#n$44

GURGO of the

respondents opted for revenue generation, ; of them for building customer relationship and one

of them for cost effectiveness! The responses obtained for the above is illustrated as follows4


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;#u*$ 6. Gu*4$ & $-'$*'$ &* "u4#n$44

/EVE/ O; EFGERTI


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;#u*$ ?. /$8$l & $H$*%#4$

IMGCT O; E-COMMERCE

This part of the uestionnaire tends to measure the outcome of employing e"commerce in the

company in an employee(s point of view! The responses collected shall serve the purpose of

measuring the effect of e"commerce in various aspects of the organi$ation! Out of the total

responses obtained, :: of the respondents favored the option of improving customer and

company profile, 99 of them opted for increasing sales table and the remaining ? of the

respondents opted for e%tending customer base! 8o responses came in for others! The data

collected from the respondents were recorded as follows4


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;#u*$ 7. Ia'% & $-'$*'$


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;#u*$ B.

E-COMMERCE < N INTEAR/ GRT O; T@E


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;#u*$ 9.

RE;ERENCE! CII"A! T! Fearney eport, 5*''?6, )etail in India: *etting organi+ed to drive grot&,

Confederation of Indian Industry, India!

?! Cutler, 1! 59&&'6, T&e ift& edi"m,American Demographics, Bol!9*, 8o!?, pp! *;"

*&

@! #uropean Commission, 59&&@6, A E"ropean Initiative in Electronic Commerce,

+Onl#n$, 8a#la"l$ a% : %%:JJ.#4.'$'."$J$'$*'$5accessed on 9:"99"996

! .B= WWW =ser Surveys, 59&&6, */U0s t&edition, WWW User Survey, +Onl#n$,

8a#la"l$ a%4%%:JJ.''.a%$'.$uJ8uJu4$*K4u*8$>4 5accessed on 9"99"996

&! 2afner, Fatie and Matthew


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9*! anowic$, A!)! 59&&>6 5u4#n$44 R$4$a*' G*$'%4,Second #dition, 3ublished by

Chapman and 2all, 6, E-Commerce,Tata Mc.raw"2ill

#ducation, 1usiness and #conomics, p!9;!

9>!


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*:! 8ir Bulan, 5*'':6,T&e economics of e-commerce: a strategic g"ide to "nderstanding

and designing t&e online mar%etplace,(usiness and $conomics, 3rinceton =niversity

3ress, p!9

*;! O#C), 59&&@6, Electronic commerce, 4pport"nities and c&allenges for

governments, 3aris!

*>! oberts,


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:>! =!S! .overnment Woring .roup on #lectronic Commerce, 59&&&6, Toards (igital

e

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