Tag: Search Engine Optimization & Online Advertising Osmania University B.com Notes

Electronic commerce or e-commerce legal issues industry in India has come a long way since its early days and has been growing rapidly across the world. The industry has matured and has seen the entry of many new players in the market. India is considered as a profitable market for these e-commerce businesses.

Competition

E-commerce legal issues have seen a generation of new players and the merging and acquisition between several old players. This has enabled development of new services, distribution channels and far greater efficiency in business activities than ever before. This development has the possibility of leading to certain competition issues with respect to the development of strategies for growing the network and maintaining their market power.

Data Protection

Security of the information provided during an online transaction is a major concern.

The Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 and the Section 43A of the IT Act together provide a structure and guidelines for the protection of data in India.

It is required of the Company to take all reasonable precautions to prevent any corruption, damage, loss or destruction of the private information and/ or data, even upon the termination of the contract between the parties.

The contracts often have specific clauses to deal with such privacy concerns and they bind all employees, agents, and subcontractors.

Security of the information provided during the online transaction is a major concern. Under section 43A of the IT Act the “Reasonable practices and procedures and sensitive personal data or information Rules, 2011” have been proposed, which provide a framework for the protection of data in India. Data can be personal, which has been defined as “any information that relates to a natural person, which, either directly or indirectly, in combination with other information available or likely to be available with a body corporate, is capable of identifying such person.” The date can also be sensitive and a sensitive personal data consists of password, financial information, physical, physiological and mental health condition, sexual orientation, medical records and history and biometric information. The entity collecting data should have a privacy policy in place, should always obtain consent from the provider of sensitive information and maintain reasonable security practices and procedures. Unauthorized access to personal information and any misuse of such personal information should be checked by the online goods/service providers.

E-Contracts

Electronic contracts are governed by the basic principles provided in the Indian Contract Act, 1872 (“ICA”), which mandates that a valid contract should have been entered with a free consent and for a lawful consideration between two adults. Section 10A of the Information Technology Act, 2000 (“IT Act”) provides validity to e-contracts. So, both ICA and IT Act needs to be read in conjunction to understand and provide legal validity to e-contracts. Further, section 3 of the Evidence Act provides that the evidence may be in electronic form.

Both the Indian Contract Act and the IT Act must be read in conjunction to understand the legal validity of e-contracts. Thus, e-contracts are governed by the basic principles of a valid contract that mandates that the contract must be entered in with free consent and a lawful consideration between two competent parties.

Also, Section 10A of the Information Technology Act, 2000 (“IT Act”) provides the validity of the e-contracts.

On e-commerce websites that operate in an online environment, the possibility of minors entering into contracts is very high. Hence, it is crucial for an online business portal consider such possibility and provides a form on the website stating that the individual with whom it is trading or entering into the e-contract has attained the age of majority.

Intellectual Property Rights

E-commerce websites are designed and sometimes operated by other parties specializing in the field. Often the content is also managed by a third party. Thus, unless the agreement between the parties specifically provides the IP rights, there is a possibility of infringement subject to the trademark, copyright or patent on an online platform.

Some others Concern:

• Ensure proper online contracts
• Original documentation in relation to taxation
• Record retention obligations
• Exchange control regulation
• Import-export regulations
• Foreign data protection law
• Terms and conditions must be specific depending upon the nature of the goods & services offered and not generic.
• Reasonable efforts to prevent the unauthorized transaction.

Applicable Laws & Regulations

Other Conditions include:

• Marketplace e-commerce entities will be permitted to enter into transactions with sellers registered on its platform on a B2B basis.
• E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection, and other services.
• Digital & electronic networks will include a network of computers, television channels, and any other internet application used in an automated manner such as web pages, extranets, mobiles, etc.
• An e-commerce entity will not permit more than 25% of the sales affected through its marketplace from one vendor or their group companies.
• In the marketplace model goods/services made available for sale electronically on the website should provide the name, address, and other contact details of the seller. Post-sales, delivery of goods to the customers, and customer satisfaction will be the responsibility of the seller.
• E-commerce entities providing a marketplace will not exercise ownership over the inventory i.e. goods purported to be sold. Such an ownership over the inventory will render the business into an inventory-based model.
• In the marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.
• Similarly, In the marketplace model, any warranty/ guarantee of goods and services sold will be the responsibility of the seller.
• E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.
• Further, guidelines on cash and carry wholesale trading as given in para 6.2.16.1.2 of the FDI Policy will apply to B2B e-commerce.

Note: Many laws applicable in e-commerce and it is in developing stage., Pl Update here in comment section about any latest changes.

Need for E-Commerce laws

The term “brick-and-mortar” refers to a traditional street-side business that offers products and services to its customers face-to-face in an office or store that the business owns or rents. The local grocery store and the corner bank are examples of brick-and-mortar companies. Brick-and-mortar businesses have found it difficult to compete with mostly web-based businesses like Amazon.com Inc. (AMZN) because the latter usually have lower operating costs and greater flexibility.

Brick and mortar (also bricks and mortar or B&M) refers to a physical presence of an organization or business in a building or other structure. The term brick-and-mortar business is often used to refer to a company that possesses or leases retail shops, factory production facilities, or warehouses for its operations. More specifically, in the jargon of e-commerce businesses in the 2000s, brick-and-mortar businesses are companies that have a physical presence (e.g., a retail shop in a building) and offer face-to-face customer experiences.

This term is usually used to contrast with a transitory business or an Internet-only presence, such as fully online shops, which have no physical presence for shoppers to visit, talk with staff in person, touch and handle products and buy from the firm in person. However, such online businesses normally have non-public physical facilities from which they either run business operations (e.g., the company headquarters and back office facilities), and/or warehouses for storing and distributing products. Concerns such as foot traffic, storefront visibility, and appealing interior design apply to brick-and-mortar businesses rather than online ones. An online-only business needs to have an attractive, well-designed website, a reliable e-commerce system for payment, a good delivery or shipping service and effective online marketing tactics to drive web traffic to the site. Governments are also adopting e-government approaches, which is the use of online services for citizens to enable them to fill in government forms, pay tax bills and register for government programs online; these services aim to cut bricks and mortar costs (building leasing/purchase and staff costs) and improve services to citizens (by offering 24/7 access to information and services).

Benefits

The presence of brick and mortar establishments may bring many benefits to businesses;

• Customer service: face-to-face customer service can be a big contributor into increasing sales of a business and improving customer satisfaction. When customers can take a product back to the store to ask staff questions or help them learn to use it, it can make customers feel more satisfied with their purchase. Research has shown that 86% of customers will pay more for a product if they have received great customer service.
• Face-to-face interaction: Many consumers prefer to be able to touch products, and experience and test them out before they buy. This is often attributed to Baby Boomers, older Generation X customers and the elderly being used to a more traditional in-person approach when it comes to shopping and preferring to have a demonstration of products or services, especially when buying new technology. Other studies show, given equal prices, a 90% preference for the in-person shopping experience, including among teens, who combine social interaction with shopping. On the other hand, many of these consumers engage in showrooming: trying on clothes or otherwise examining merchandise in-store, and then buying online at cheaper prices.
• Trust: Online commerce presents an increased risk of internet fraud, and thus some consumers may be averse to it.

Attracting More Attention to Physical Stores

Online retailers often find an easier time attracting customers because it takes less effort and time to draw them in. Online sales continue to grow over the years because customers can shop from the convenience of their homes, 24 hours a day.

Brick and mortar stores must employ more tricks in order to entice customers to leave their homes and come and shop in a physical store. The reality is that technology and the internet are also vital to the success of brick and mortar stores in today’s world. Stores that offer the latest in technology-based payment systems, ordering options, and websites are usually the ones that bring in the most business. Consumers are constantly looking for easier and faster ways to shop and purchase the things they want and need.

Brick and mortar stores, while not as necessary as they once were, are still thriving. While online retail stores seem to be taking over, many companies are embracing the changing times and now operate with both online and brick and mortar options.

Bricks and clicks, or omnichannel retail strategy, is a jargon term for a business model by which a company integrates both offline (bricks) and online (clicks) presences, sometimes with the third extra flips (physical catalogs). Many retailers also offer telephone ordering and mobile phone apps, with most providing telephone sales support. The wide uptake of smartphones made the model even more popular, as customers could browse and order from their smartphone whenever they had spare time. The model has historically also been known by such terms as clicks and bricks, click and mortar, bricks, clicks and flips, and WAMBAM, i.e. “web application meets bricks and mortar”.)

Bricks and clicks is a term for a business model by which a company integrates both offline (bricks) which means shops and stores plus online (clicks) presences. Additionally sometimes retailers add a few extra flips added such as catalogue, telephone ordering and mobile phone apps and telephone sales support. The initiation of mobile web has made businesses operating bricks and clicks businesses very popular, because it means customers can do tasks like shopping when they have spare time and do not have to be at a computer. Most of the bricks and clicks customers like to use mobile shopping sites. A common example of the bricks and clicks model is when a chain of stores allows the customer to order products both online and physically in one of their stores, also allowing them to either pick-up their order directly at a local branch of the store or get it delivered to their home.

An example of the bricks and clicks model is when a chain of stores offers consumers a choice of purchasing products either online, or physically, in one of their stores, which may subsequently be either picked-up at one of their retail stores (click and collect, curbside pickup), or delivered. The model has many alternative combinations, as well as the related omnichannel concept of showrooming where customers try on clothing in person but the actual purchased product is ordered in-store on the retailer’s website and delivered to their home later. By the mid-2010s, the success of the model had discredited that the Internet would render traditional retailers obsolete through disintermediation.

Home delivery

The default model in e-commerce is one of browsing and ordering online, with goods sent from a warehouse, or in some cases, a retail store. One of the first known purchases from a company arguably operating a bricks and clicks business model was a Pizza Hut pizza ordered over the internet in 1994. The great surge in adoption of the bricks and clicks model came around 2000, with large retailers, such as Walmart, starting websites that allow users to browse some of the same goods that they would find in store from their personal computer screens.

Advantages

Bricks and clicks is beneficial to various segments. For example, supermarkets often have different customer types requiring alternative shopping options; one group may wish to see the goods directly before purchase and like the expediency of quickly shopping, while another group may require a different convenience of shopping online and getting the order delivered when it suits them. Thus, having a bricks and clicks model means both customer groups are satisfied.

For companies

The bricks and clicks model has typically been used by traditional retailers who have extensive logistics and supply chains, but are well known and often respected for their traditional physical presence. Part of the reason for its success is that it is far easier for a traditional retailer to establish an online presence than it is for a start-up company to employ a successful purely online one, or for an online only retailer to establish a traditional presence, including a strong and well recognised brand, without having a large marketing budget. It can also be said that adoption of a bricks and clicks model where a customer can return items to a brick and mortar store can reduce wasted costs to a business such as shipping for undelivered and returned items that would traditionally be incurred.

For consumers

A bricks and clicks business model can benefit various members of a customer base. For example, supermarkets often have different customer types requiring alternative shopping options; one group may wish to see the goods directly before purchase and like the convenience of shopping in person on short notice, while another group may require a different convenience of shopping online and getting the order delivered when it suits them, having a bricks and clicks model means both customer groups are satisfied. Other previously online-only retailers have stated that they have found benefit in adding a brick-and-mortar presence to their online-only business, as customers can physically see and test products before purchase as well as get advice and support on any purchases they have made. Additionally, consumers are likely to feel safer and have more confidence using a bricks-and-clicks business if they already know the brand from a brick-and-mortar store.

Disadvantages

For firms

A major factor in the success or failure of this business model is in the control of costs, as usually maintaining a physical presence paying for many physical store premises and their staffing requires larger capital expenditure which online only businesses do not usually have. Conversely, a business selling more luxurious, often expensive, or only occasionally purchased products like cars may find sales are more common with a physical presence, due to the more considered nature of the purchasing decision, though they may still offer online product information. However, some car manufacturers such as Dacia have introduced online configurators that allow a customer to configure and order complete cars online, only going to a dealership to collect the completed car, which has proven popular with customers.

“On the other hand, an online-only service can remain a best-in-class operation because its executives focus on just the online business.” It has been argued that a bricks and clicks business model is more difficult to implement than an online only model. In the future, the bricks and clicks model may be more successful, but in 2010 some online only businesses grew at a staggering 30%, while some bricks and clicks businesses grew at a paltry 3%. The key factor for a bricks and clicks business model to be successful “will, to a large extent, be determined by a company’s ability to manage the trade-offs between separation and integration” of their retail and online businesses.

For consumers

• Some argue that online shopping, which makes price comparison easier for customers, encourages a ‘race-to-the-bottom’, where retailers only compete on price, with quality and service deteriorating as a result. This is especially prevalent when comparison shopping websites such as mySupermarket allow prices to be compared without even visiting a retailer’s website.
• The prices listed online may not match the prices listed offline. The reasons for this include mis-management, and economics (overhead cost of an online purchase and an offline purchase is different). This may result in confusion and deviations of expectations for the buyers.
• Buyers may end up buying more items than they need, because online businesses are able to show them more items, more promotions, and more advertisements.

Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product’s availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.

Internet business models are categorized as business-to-consumer, business-to-business, and more recently, consumer-to-consumer. Business-to-consumer and business-to-business models typically sell goods and services or provide information designed to help visitors make purchase decisions. Consumer-to-consumer models involve consumer-to-consumer information or product exchange.

An online shop evokes the physical analogy of buying products or services at a regular “bricks-and-mortar” retailer or shopping center; the process is called business-to-consumer (B2C) online shopping. When an online store is set up to enable businesses to buy from another businesses, the process is called business-to-business (B2B) online shopping. A typical online store enables the customer to browse the firm’s range of products and services, view photos or images of the products, along with information about the product specifications, features and prices.

Pure-play Internet companies operate solely on the Internet, while click & mortar business models combine a physical presence with online selling or marketing. Click & mortar businesses may operate a website that sells products or advertises those it sells on the high street. The difference between the two business models is reflected in running costs, marketing strategies and customer perceptions. Internet business have fewer overheads but businesses that have a strong street presence inspire more customer confidence.

Marketing:

Pure-play companies have to invest more money, time and effort in marketing than a hybrid businesses. Businesses that have a physical presence, particularly on a national or international scale, are already known to potential customers, whereas Internet business have to advertise their presence more aggressively.

Perceptions:

Business that combine a presence on the street with online retailing may inspire more customer confidence than those that only operate online, according to the Internet Marketing Center. Customers believe that a business is less likely to vanish overnight if it has a customer presence, the website explains.

Benefits to Customers:

Companies that only operate online can sell products at a greater discount to customers because they have fewer operational costs. Clicks & mortar businesses can offer a more versatile service.

A combination of regulatory reform and technological innovation enabled e-commerce to evolve as it has. Although the precursor of the Internet appeared in the late 1960s, Internet e-commerce took off with the arrival of the World Wide Web and browsers in the early 1990s and the liberalisation of the telecommunications sector and innovations that greatly expanded the volume and capacity of communications (optic fibre, digital subscriber line technologies, satellites).

As a result, barriers to engage in electronic commerce have progressively fallen for both buyers and sellers. Earlier forms of e-commerce were mostly custom-made, complex, expensive and the province of large firms. Today, for a few thousand dollars, anyone can become a merchant and reach millions of consumers world-wide. What used to be business-to-business transactions between known parties has become a complex web of commercial activities which can involve vast numbers of individuals who may never meet. In this sense, the Internet has done for electronic commerce what Henry Ford did for the automobile converted a luxury for the few into a relatively simple and inexpensive device for the many.

E-commerce and economic efficiency

The overall economic prosperity of the country will determine the extent of e-commerce activities. Organizations will target developed economy for more internet based transaction as compared to a developing country.

The globalization has encouraged the development of a single international market for trade and commerce. It has reduced the social and the cultural difference between countries. This has promoted culture of standardization of prices and reduction of intermediaries.

Language and culture difference pose a special problem to smaller companies as they do not have enough financial resources to develop a regional specific e-commerce.

A key reason why electronic commerce, especially the business-to-business segment, is growing so quickly is its significant impact on business costs and productivity. Because many of these applications are relatively simple, they may be expected to be widely adopted and have a large economic impact.

Even though some Web sites cost hundreds of millions of dollars, simpler sites can be designed and constructed for tens of thousands. In general, it is less expensive to maintain a cyber-storefront than a physical one because it is always “open”, has a global market, and has fewer variable costs. For exclusively e-commerce merchants who maintain one “store” instead of many, duplicate inventory costs are eliminated.

A key factor in reducing inventory costs is adopting a “just-in-time” inventory system and improving the ability to forecast demand more accurately. Both of these can be accomplished through the adoption of electronic commerce, which strengthens the links between firms. Improved demand forecasting and replenishment of stocks is estimated to lead to a reduction in overall inventories of $250-$350 billion, or about a 20 to 25 per cent reduction in current US inventory levels.

Social Factors

Though the advent of the internet is a universal phenomenon, but the usage pattern is not the same. The level of the internet access and usage directly influence buying behavior of the consumer. The social perception of the internet directly influences its use. The typical perception of the internet can be classified as no perceived advantage, little or no trust in the internet, security risk, cost of usage and utility.

The group of population around above classification are the ones who are not utilizing the internet, thus organization needs to factor them in demand analysis.

The social impact of the internet cannot be undermined. It has greatly influenced our way of life and has brought many differences to the fore-front. The population with income and a certain degree of education is able to use the internet much easily compared to population with costly service or slower access.

Developed countries are promoting the use of the internet and making efforts through social programs. Even people with special needs are able to use the internet to their advantage.

Legal and ethical issues with internet usage

There are certain types of behaviors which are tolerated and accepted by the society around the use of the internet. These generally accepted norms are referred to as ethical standards.

Countries are developing ethics related laws advocating the correct use of the internet. Any organization should be aware of these laws and develop their marketing programs after taking them into consideration.

Among internet users the biggest concerns come with privacy factor. Privacy is described as a moral right every individual, enjoys from intrusion in their personal affairs. The internet users have their online identity through which they perform a financial and personal transactions. Consumers are very much concerned for the protection of this online identity.

Effective e-commerce requires an organization to protect contact information, consumer profile, and behavioral information etc all the time. Organizations should not share or use personal information without prior consumer consent.

The other half of the legal and ethical issue concerns organization itself and its own protection against hacking or industrial espionage.

Technological Factors

The modern digital technology is disruptive in nature. It forces the organization to re-look at its strategies more often. The advent of the internet has seen the rise of online retailers, seriously hampering the function of neighbourhood stores.

The biggest challenge for today’s organization is to access the current technological environment and figure which solution would be the best against the competition. Companies can adopt either of following three courses:

• Cautious approach
• Fast follower approach
• First mover approach

In addition to in-home fixed internet access, the newer addition to technology is the mobile connectivity. This mobile connectivity is through phones, internet enabled devices, digital TV and digital radio. With the availability of so many digital devices, a technology convergence is on the horizon.

Like privacy, security is also a great concern for the organization as well as the internet users. A security fear prevents greater adoption of e-commerce facilities.

Any security system should ensure and verify the following:

• Authenticity of identity of users
• Privacy and confidentiality of e-commerce the parties
• Completeness of transaction
• Un-interrupted continuity

Technology Policy

One of the key features of electronic commerce is the potential system-wide gains in efficiency to be reaped when firms are linked across industries. Fostering such system-wide improvements requires rethinking technology and innovation policies, such as technology diffusion programmes, which tend to focus on one industry, such as manufacturing, while in fact the largest contributions to system-wide gains may come from services, such as wholesale trade, transportation and retail trade. This suggests the need to widen the notion of “innovation” from a focus on high technology in manufacturing to include consumer goods and services and to adopt a more systemic perspective.

Political Factors

The political and the governing environment in the region or country is determined through ruling government, public opinion and pressure/consumer advocacy groups.

The government needs to put a control in place as to monitor the development and usage of the internet. But as internet promotes global collaboration, government agencies across countries need to collaborate to ensure the safety of e-commerce.

The countries are examining the current tax structure to ensure that e-commerce activities do not reduce tax collection of local government and agencies.

Organizations need to monitor its macro environment and make necessary changes as to remain competitive and profitable.

India has an Internet user base of about 696.77million as of May 2020, about 40% of the population. Despite being the second-largest user base in world, only behind China (650 million, 48% of population), the penetration of e-commerce is low compared to markets like the United States (266 million, 84%), or France (54 M, 81%), but is growing, adding around 6 million new entrants every month. The industry consensus is that growth is at an inflection point.

In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. Demand for international consumer products (including long-tail items) is growing faster than in-country supply from authorised distributors and e-commerce offerings. Long tail business strategy allows companies to realize significant profits by selling low volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The term was first coined in 2004 by Chris Anderson.

In 2017, the largest e-commerce companies in India were Flipkart, Snapdeal and Amazon. In 2018, Amazon beat Flipkart and was recorded the biggest ecommerce in India in terms of revenue.

eCommerce is India’s fastest growing and most exciting channel for commercial transactions.  The Indian e-commerce market is expected to grow to US$200 billion by 2026 from US$ 48.5billion as of 2018.  This growth has been triggered by increasing internet and smartphone penetration.

Though the sector has witnessed tremendous growth and is expected to grow, many e-commerce ventures have faced tremendous pressure to ensure cash flows. But it has not worked out for all the e-commerce websites. Many of them like Dhingana, IndiaPlaza.in, eBay-India, Rock.in, Seventy MM amongst others had to close down or change their business models to survive. In March 2020, the Government of India restricted online sales of all goods except for critical items including food, pharmaceuticals, and medical equipment. Many Indian startups including Urban Company, BookMyShow, Pepperfry and Nykaa, which do not feature in the government’s list of notified essential services, are running at a loss due to COVID-19 pandemic.

Funding

• Examples of venture capital firms having invested in e-commerce companies in India are as follows: Flipkart.com raised about USD 2.3 billion. On 10 July 2013, Flipkart announced it had received $200 million from existing investors Tiger Global, Naspers, Accel Partners, and ICONIQ Capital, and an additional $160 million from Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina, Vulcan Inc. and more from Tiger Global.
• In February 2014, online fashion retailer Myntra.com raised $50 million from a group of investors led by Premji Invest, the investment company floated by Azim Premji, Chairman of Wipro. May 2014 also witnessed an acquisition of Myntra by Flipkart reportedly for ₹2,000 crores.
• In September 2015, PepperTap raised $36 million from Snapdeal and others.
• In July 2020, Purplle raised $30 million from Goldman Sachs and others.
• In January 2021, B2B Udaan has raised $280 million from new investors Moonstone Capital Partners and Octahedron Capital, besides existing investors Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital and Tencent Holdings.

Government initiatives

Since 2014, the Government of India has announced various initiatives, namely Digital India, Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective implementation of such programs will likely support growth of E-commerce in the country. Some of the major initiatives taken by the Government to promote E-commerce in India are as follows:

• As of February 15, 2020, the Government eMarketplace (GeM), listed 1,071,747 sellers and service providers across over 13,899 product and 176 service categories. For the financial year 2020-21, government procurement from micro and small enterprises was worth Rs. 23,424 crore (US$ 3.2 billion).
• In a bid to systematise the onboarding process of retailers on e-commerce platforms, the Department for Promotion of Industry and Internal Trade (DPIIT) is reportedly planning to utilise the Open Network for Digital Commerce (ONDC) to set protocols for cataloguing, vendor discovery and price discovery. The department aims to provide equal opportunities to all marketplace players to make optimum use of the e-commerce ecosystem in the larger interest of the country and its citizen.
• National Retail Policy: The government had identified five areas in its proposed national retail policy—ease of doing business, rationalisation of the licence process, digitisation of retail, focus on reforms and an open network for digital commerce—stating that offline retail and e-commerce need to be administered in an integral manner.
• The Consumer Protection (e-commerce) Rules 2020 notified by the Consumer Affairs Ministry in July directed e-commerce companies to display the country of origin alongside the product listings. In addition, the companies will also have to reveal parameters that go behind determining product listings on their platforms.
• Government e-Marketplace (GeM) signed a Memorandum of Understanding (MoU) with Union Bank of India to facilitate a cashless, paperless and transparent payment system for an array of services in October 2019.
• Under the Digital India movement, Government launched various initiatives like Umang, Start-up India Portal, Bharat Interface for Money (BHIM) etc. to boost digitisation.
• In October 2020, Minister of Commerce and Industry, Mr. Piyush Goyal invited start-ups to register at public procurement portal, GeM, and offer goods and services to government organisations and PSUs.
• In October 2020, amending the equalisation levy rules of 2016, the government mandated foreign companies operating e-commerce platforms in India to have permanent account numbers (PAN). It imposed a 2% tax in the FY21 budget on the sale of goods or delivery of services through a non-resident ecommerce operator.
• In order to increase the participation of foreign players in E-commerce, Indian Government hiked the limit of FDI in E-commerce marketplace model to up to 100% (in B2B models).
• Heavy investment made by the Government in rolling out fiber network for 5G will help boost E-commerce in India.

Growing investment in logistics and warehouses

Online retailers say they have extended their reach to “70,000-80,000 pin codes” out of nearly 100,000 pin codes in the country. There are also reports of online retailers trying to tie up with India Post and petrol pump stations to reach out to more customers. Expected aviation boom in small cities might also widen the reach of online retailers in future.

Growing usage of debit cards for cashless transaction

There has been a net addition of nearly 140 million debit cards in the country in the past two years. What is more, the usage of debit cards at point-of-sale terminals has seen a growth of 86 per cent in the same period. It indicates the willingness to use debit cards for purposes other than withdrawing money at ATMs has increased. With many online retailers still insisting on use of cards for high value transactions, it is a welcome change. It will allow e-tailers to reach out to many areas and many more customers in coming years.

Unique or Commoditized Products

Establishing a reputation and brand for quality products always drives demand. Commoditized products such as mainstream tools, consumer electronics or other equipment’s generally show less success while selling online. Even though these are the most popular online items, consumers prefer to buy them from renowned retailers such as eBay or Amazon.

Growth of mobile commerce

Online retailers’ growing reach in non-metro cities is being driven by the rise in usage of mobile internet in the country. According to Internet and Mobile Association of India, the number of mobile internet users in the country stood at 200 million in December 2022. It is set to grow manifold by 2025.

Remarketing

Businesses of any size have to be creative to stand out of the crowd. Ecommerce creativity emerges from multiple touches to produce continued interests in the products. In one word, this technique is popularly known as Remarketing.

Adoption of Multi-Channel Investments

Cross-channel investments are highly aggressive in augmenting both online and offline buying strategies. Multi-channel eCommerce business is an environment in which a company can sell through two or more online channels. Many stores are pushing endless-aisle initiatives and are being used as a warehouse for an online catalogue to enhance the speed of home delivery.

Growth in cities beyond metros

About 20 per cent of India’s population lives in cities outside of metros. There are several pointers that suggest this large group of city dwellers have significant purchasing power. Honda, for instance, sells 60 per cent of its Amaze car in tier-II and tier-III cities. These cities account for 55 per cent of Honda’s City models.

Consumer demand is rising rapidly even in small towns and cities. Talking about the potential of fast-moving consumer goods (FMCG) sector, a 2012 Nielsen report says: “While metros will remain a staple for marketers and increasing a rural footprint will be critical for volumes in the long run, there is a growth opportunity that is vastly under-rated by many marketers today, which could emerge as a key growth engine for the next 10 years. Middle India, a region made up of approximately 400 towns each with a population of 1-10 lakh, are home to 100 million Indians.” It further says: “These cities are ready to behave like the metros of tomorrow. The annual per capita FMCG consumption of Middle India towns touched Rs 2,800”, which is much higher than the national average of Rs 1,600.

Maintaining eCommerce Sites by the Third-Party Provider

Creating an attractive and functional eCommerce site is quite a challenging task. However, a third-party eCommerce provider will make this task simple for you. They offer site set up and maintenance to entice businesses. For instance, some of the third-party eCommerce site providers do not charge any transaction fees once the items are sold. Instead, they offer monthly plans.

Besides, the emergence of digital services is gradually proving to be the leading driver for eCommerce growth. The rise of portable mobile devices and advanced videos is increasing the desire of the consumer to spend more time researching online for price matching and ultimately on their buying decision.

Localisation of Internet content

Google India spokesperson says that web content search in Hindi has grown a whopping 155 per cent in the past year, which is significantly higher than the growth of content search in English. Hindi content searched through mobile Internet grew at even higher rate of 300 per cent in the same period. Growth in traffic in other languages, too, was impressive.

Ecommerce businesses are fast gaining grounds and changing the way of doing business. Electronic commerce refers to the buying and selling of products or services over electronic systems such as the Internet and other computer network The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction’s life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.

The internet has changed many aspects of our lives, including the way we communicate with each other, how we keep our finances. It has made a profound impact on society. Now we shop online from our houses. This forces retailers to open online division. It can also force smaller businesses to shut their doors, or change to being completely online. It also has changed people way of spending money. Undoubtedly, it will continue to influence how companies sell and market their products, as well as how people choose to make purchases for many years to come. The following are the impact of e-commerce on the global economy

The main aspect of ecommerce involves doing business on the web and includes:

• Business to business (B2B) trading which involves a business such as a company trading with another business on the world wide web.
• Business to consumer (B2C) trading which involves a business such as a company directly dealing with consumers over the world wide web.

Ecommerce has affected businesses positively and negatively. On the one side, ecommerce makes it easier for businesses to reach a much wider audience at less expense than would be required if the traditional retail method was to be applied. With ecommerce, there is no requirement to acquire expensive shops in high streets. You can produce or store your goods at a remote upcountry location and still advertise and sell them worldwide. While the cost of developing a good website may be substantial, it is much cheaper than letting expensive high street storefronts. Additionally, once you have your website operational, you will reach a wide client base. The next thing is to ensure that you have access to appropriate means of transporting goods to customers who make orders.

On the other hand, established enterprises, most of which are vertically integrated are finding it harder than before to retain their market share. More flexible competitors are entering the market traditionally dominated by these established companies, making competition fiercer than ever. To remain relevant, old school companies are having to adjust to the new technologies and incur capital expenditure in developing new capabilities. Blockbuster, a leading video rental and franchise in the world had enjoyed many years of success. However, Netflix, an ecommerce based firm entered the market and took away a considerable market share from Blockbuster which was forced to readopt its business model to offer ecommerce services. Another good example of how ecommerce is changing the business landscape is Amazon.com which grabbed a substantial market share from traditional booksellers forcing them to start selling online as well.

Traditional companies that have spent significant amounts of money in the past in developing physical infrastructure are suddenly finding themselves being outsmarted by startups with much less physical infrastructure, usually based on ecommerce model. These ecommerce-based startups ship goods from oversea suppliers who produce high-quality goods at less expense. This gives them an advantage over vertically integrated companies that have traditionally sought to do everything from production to supply. It should be noted that such integrated companies may not be the best in everything; a company may be good in one aspect and another in a different aspect. The traditional companies are therefore being forced to focus only on what they can do best and outsource the rest if they have to compete favourably.

Ecommerce has contradicted the classic economic theory of decreasing returns to scale which holds that a business cannot grow its profits infinitely. E-commerce based enterprises have been shown to sustain fast growth while increasing returns as well. The reason is that these startups have minimal infrastructure and inventory and rely heavily on information and communication. In fact, in information-based product industries, distribution and sale via ecommerce may bring the cost per unit to almost zero. A perfect example here would be the online software vendors who allow customers to buy products and added licenses online.

The impact of ecommerce on businesses is immense and cannot be exhaustively elucidated in a short article like this. The impact is expected to increase as internet penetration in emerging markets increases.

Impact on direct marketing

Product promotion: E-commerce enhances promotion of products and services through direct, attractive and interactive contact with customers.

New sales channel: E-commerce creates a new distribution channel for existing products. It facilitates direct reach of customers and the bi-directional nature of communication.

Direct savings: The cost of delivering information to customers over the Internet results in substantial savings to senders when compared with non-electronic delivery. Major savings are also realized in delivering digitized products versus physical delivery.

Reduced cycle time: The delivery of digitized products and services can be reduced to seconds. Also, the administrative work related to physical delivery, especially across international borders, can be reduced significantly, cutting the cycle time by more than 90 percent.

Customer service: Customer service can be greatly enhanced by enabling customers to find detailed information online. Also, intelligent agents can answer standard e-mail questions in seconds and human experts’ services can be expedited using help-desk software.

Corporate image: On the Web, newcomers can establish corporate images very quickly. Corporate image means trust, which is necessary for direct sales. Traditional companies such as Intel, Disney, Dell, and Cisco use their Web activities to affirm their corporate identity and brand image.

New product capabilities: E-commerce allows for new products to be created and existing products to be customized in innovative ways. Such changes may redefine organizations’ missions and the manner in which they operate. E-Commerce also allows suppliers to gather personalized data on customers.

Changing Nature of Work: The nature of work and employment will be transformed in the Digital Age; it is already happening before our eyes. Driven by increased competition in the global marketplace, firms are reducing the number of employees down to a core of essential staff and outsourcing whatever work they can to countries where wages are significantly less expensive.

The human services delivery system

One significant issue is the organisation of the Victorian human services sector. Many of challenges facing the implementation of the initiatives described above stem from the complexity and diversity, not to say fragmentation, of the existing structure of organisational relationships. A characteristic of the Victorian human services delivery system is the centrality of the large government organisation which works with a multitude of other autonomous organisations to deliver services to consumers.

Complexity of stakeholders

One important factor in shaping the Department’s operations is the complex range of stakeholders in the health and human services delivery areas. The three major stakeholder groups include

• The recipients of government benefits (the ‘consumers’)
• The agencies which provide services directly to the consumers
• The government sector which establishes policies for allocating benefits to consumers and funds the provision of services.

Infrastructure requirements and costs

The Department and providers alike confront issues surrounding the development of infrastructure for any system that might be implemented. The dispersed nature of service delivery and the large number of service staff requires a substantial investment in whatever devices are used to support the system of delivery. While it is possible to use the telephone for data input, this is relatively cumbersome and inflexible, difficult for many to use and limited in its ability to record complex information.

Governmental and political complexity

The provider field is not the only one characterised by only diverse stakeholders and complex arrangements. The Government sector itself is divided along many lines. State governments receive funding from the national (Commonwealth) government. Both levels have policy frameworks which are not always completely coordinated. The area of Commonwealth-State relations is a complex one in all areas of government activity.

Multiple relationships among providers

The Department purchases services on behalf of consumers from many provider organisations but the agency from which services are purchased is not necessarily the agency which provides the services. This process of ‘brokering’ may occur in two ways. An agency may sub-contract some or all of the services the Department has purchased to other agencies. In fact, some agencies act solely as brokers rather than providers. Alternatively, the agency may place a consumer in a range of programs offered by other agencies and reciprocal or ‘cross brokering’ arrangements are not uncommon.