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IMPACT OF SHOWROOMING ON RETAIL

SUNIL VAKAYIL 1 RAJEEV BHADORIA 2

1
Director, RVS Institute of Management Studies & Research, Coimbatore, Tamil Nadu.
2
Vice President, Tata Capital Ltd., Mumbai.

ABSTRACT

From a modest start in the eighties, e commerce now has grown many folds.The growth has been
fueled by increased penetration of internet enabled devices and the ability to ensure that many new
segments of the society could be added in as prospective buyers.There have been various models
which have been worked out in India and some of them have seen great amount of success .These
modelsdifferwith product lines and also differ with the various e commerce partners.

There is an increasing trend amongst companies these days to launch products on the e platforms first
and then go to the traditional outlets.This is sending in strong signals to consumers about the early
availability of products specially technologically advanced ones in the e channel .

The retailers in most of the areas feel threatened by the attempts of the companies to woo in e
commerce partners.There have been instances where in retailers have tried to dissuade customers
from buying from e commerce portals.

An increasing trend called showrooming is being noticed in the retail market, where customers visit
the retail outlets, and then go online and by the products from ecommerce portals.In the American
markets brick and mortar retailers tend to loose close to 24% of their business to ecommerce portals.
There is a trend which is also being noticed where customers visit the e-commerce websites and they
end up purchasing from brick and mortar stores, this trend is called webrooming.

This paper is an out come of an empirical study that was conducted across various citiesof TN on
various brick and mortar partners regarding their perception of customer who are actively involved in
showrooming and webrooming

Key Words: e- Commerce, Show rooming, Web rooming, Brick and mortar retailers

Introduction
e-Commerce is a transaction of buying or selling online. Electronic commerce draws on technologies
such as mobile commerce, 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
for at least one part of the transaction's life cycle although it may also use other technologies such as
e-mail.

In 1994, Jeff Bezos; an American businessman started his e-commerce website Cadabra.com, now
popularly known as Amazon.com. Amazon was the first online firm to execute secured online
transactions. At the onset, Amazon was known as an online bookstore, but with the whelming

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customer-response it expanded to trading in books, music, apparels, CDs/DVDs, electronics, MP3s,

videogames and many more.

The most impactful changes that have taken place in the eCommerce realm in the last 10 years,
include:
The rise of online marketplaces.
The seamless shift to using mobile devices for online shopping.
The tremendous growth of online and digital marketing and advertising.
The practice using of digital modifications or enhancements to reality in sales and mainstream
consumer shopping.

Over the last two decades, rising internet and mobile phone penetration has changed the way we
communicate and do business. E-commerce is relatively a novel concept. It is, at present, heavily
leaning on the internet and mobile phone revolution to fundamentally alter the way businesses reach
their customers.

While in countries such as the US and China, e-commerce has taken significant strides the industry in
India is, still at its infancy. However over the past few years, the sector has grown.

According to Google India, there were 35 million online shoppers in India in 2014 Q1 and is expected
to cross 100 million mark by end of year 2016 CAGR vis-à-vis a global growth rate of 8–10%.
Electronics and Apparel are the biggest categories in terms of sales.

According to a study conducted by the Internet and Mobile Association of India, the e-commerce
sector was estimated to reach Rs. 211,005 crore by December 2016. The study also stated that online
travel accounts for 61% of the e-commerce market.

Pic No 1

A Logical Change In The Logistic Model :

As e-commerce grows there is proportional increase in the demand on the supporting logistics
functions. The best value that e-commerce offers to a customer is that it places on a platter a very
large variety of choice of products to the customers even in the most remote corners of the
country.Companies just cannot compete merely based on size of business as the business these days is

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continuously changing and revolves around information.The buzz word in the e -Comm world is foot
step delivery at no incremental cost.This would mean thattodays e comm companies would ensure
that they deliver goods to the exact location where the customer is not just at his door step.If the
customer is on the move the goods would be delivered to the customer in the car.

Future Trends In The IndianE-Commerce Industry:

Fewer Discounts

Companies will go after profitable growth rather than wooing customers with deep discounts . A
bigger user base will just be the cue for companies to reduce discounts and focus on profitable
growth.
"Building scale won't be a challenge for the large players," says Sandeep Aggarwal, founder,
Shopclues. In India today about 85-9-% of the e-comm business in India comes from large players
like eBay.in,Amazon,Paytm,Flipkart,Snapdeal& Shop Clues.

Cash On Delivery To Decline

Cash on Delivery (CoD), a preferred mode of payment for many customers, will decline as more and
more people familiarize themselves with using payment wallets to shop and pay bills.

Increased Transactions

"There were 50 million transacting users in 2015. In the year 2016 we saw about 75million,it is
predicted that more users would be logging in through their smartphones. In China, for example,
users browse on the desktop, but they transact via smartphones -- due to quicker linkages to payment
gateways.

Newer Categories

Companies will have their hands full as more users come on board, but they will be up to the task of
serving the needs of customers. That will lead to the emergence of new categories of services -- like
delivering even milk and water -- which will replace the neighbourhood store." "You won't need to
step out to shop."

The Rise of Artificial Intelligence:

As the use of AI is on the increase , the e comm players would be effectively using the intelligence
through application of data available which would be analyzed using various analytic tools and
softwares.This would bring in an enhanced targeted marketing approaches.

Digital Payment Types

With the likes of Apple Pay, Amazon Pay and PayPal customers are no longer having to take our their
card to complete an online transaction, orders can be made with a fingerprint or online pin number. In
2016, more and more customers adopted digital payment types through all channels, using their
phones, cards and even watches to complete contactless payments – this is set to continue and expand

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in 2017 where, PureNet predicts that every customer will expect to be able to complete their
transaction using a digital wallet.

The Rise of Fast Delivery

Over the last few years ecommerce delivery timescales have drastically reduced and become much
more precise. Customers now expect to be able to Click and Collect. There are companies like
ASOS, New Look and Boohoo that have recently launched ‘precise delivery’ with 1-hour delivery
windows, and the majority of retailers now offer next day delivery if ordered before 10pm. PureNet
predicts same-day delivery will continue to rise in 2017 , and more ecommerce integrations with
drop-off point providers such as Doddle.

Even More Omni-Channel

Earlier commerce was limited to bricks & mortar stores, then came catalogue sales, phone ordering,
ecommerce, social commerce and even TV commerce. The issue facing many retailers today is
channel fragmentation. As more features and trends are released, the gap between channels can easily
widen, resulting in a confused client base and diluted brand image. PureNet expects 2017 to be the
catalyst for retailers to begin truly unifying their shopping channels by delivering features such as
multichannel wish lists and real-time stock information. PureNet calls this ‘getting the basics right’.
Once you have these, you can begin experimenting with more innovative omni-channel technologies.

Mobile Mobile Mobile

Mobile commerce is expected to account for over £25billion, an increase of more than 25% over the
last year . This figure is predicted to continue to increase, reaching over £30billion in 2017 and
£42billion by 2020. According to eMarketer, this growth is driven by larger screens, smoother buying
experiences, better mobile search and context-driven discovery. The trend in mcommerce is no longer
simple optimisation, customers don’t just expect a website to ‘work’ on their phones – the retailers
reaping the rewards are the ones we see thinking truly mobile-first. Designing a unique experience
that works in synergy with a phone’s size and functionality, not seeing a phone screen as an
ecommerce limitation but as the new shop window.

Chatbots

Over the last few years we have seen mobile messaging apps explode with popularity, and thanks to
ecommerce personalisation, artificial intelligence has been adopted with many of the large retailers.
2017 will see these two trends combine to deliver a new way of shopping and communicating, –
chatbots. Chatbots are AI-led automated messenger services that allow your customers to engage with
your brand via instant messenger. The smartest Chatbots detect exactly what the customer is looking
for, suggests products, places orders, answers customer service queries and even detects the style of
language used in order to converse in a similar manner.

Models in e Commerce

e -Commerce or Electronics Commerce business models can generally categorized in following

categories.

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1. Business - to - Business (B2B)

Website following B2B business model sells its product to an intermediate buyer who then sells the
product to the final customer. As an example, a wholesaler places an order from a company's website
and after receiving the consignment, sells the end product to final customer who comes to buy the
product at wholesaler's retail outlet.

Fig 2 :Source: https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm

2. Business - to - Consumer(B2C)

Website following B2C business model sells its product directly to a customer. The customer can
choose a product and order the same. Website will send a notification to the business organization via
email and organization will dispatch the product/goods to the customer.

Fig 3 :Source: https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm

3. Consumer - to - Consumer (C2C)

Website following C2C business model helps consumer to sell their assets like residential property,
cars, motorcycles etc. or rent a room by publishing their information on the website. Another
consumer may opt to buy the product of the first customer by viewing the post/advertisement on the
website.

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Fig 4 :Source: https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm

4. Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and exchange
information with various business organizations. Such websites are accredited by the government and
provide a medium to businesses to submit application forms to the government

Fig 5 :Source: https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm

5. Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support
auctions, tenders and application submission functionalities.

Fig 6 :Source: https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm

6. Government - to - Citizen (G2C)
Government uses G2C model website to approach citizen in general. Such websites support auctions
of vehicles, machinery or any other material. Such website also provides services like registration for
birth, marriage or death certificates.

Fig 7 :Source: https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm

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Different types of Models involved in e –Commerce

1. Drop-Shipping

Drop-shipping is when you sell items on your website that are manufactured, fulfilled, and shipped to
your customers by someone else. Generally, these relationships are established between you and a
manufacturer or a wholesaler who has a warehouse full of the items you’d like to sell. Once the proper
agreements are in place, the manufacturer or wholesaler will send you images of the products you
wish to sell along with pricing. You’ll then place those items for sale in your ecommerce store. Your
job is to sell the items, and the manufacturer or wholesaler will fulfill the orders and ship them to your
customers.

2. Wholesaling and Warehousing

This model is when you buy products in bulk and store them in a warehouse somewhere. Usually
people who prefer this model are selling product in volume. People most commonly use this in a B2B
market as opposed to a B2C model.

3. White Labeling and Manufacturing

Manufacturing is when you’re actually paying to have the items created for you. In white labeling,
you aren’t manufacturing the product, but your licensing contract allows you to put your name or
brand on it as if you are the manufacturer. So with this scenario, you are either manufacturing
products overseas or importing them from overseas and putting your brand on them. You’re the top of
the product chain at this point.

When you’re importing or manufacturing overseas, your margins are much higher. You get to create
the product for a very low price and then sell it online for a much higher price. You also control all
the shipping and fulfillment yourself; while it’s more work, it has a lot of benefits, too. You get to
control the entire cycle and always know what’s going on with the product. Also, at this point, you
can take advantage of wholesalers and drop-shippers to retail your products for you.

Mobile Commerce

Mobile commerce or m-commerce, uses mobile devices like the mobile phones as can carry out
online transactions. Nowadays, web designers are trying to optimize website so they can easily view
on mobile phones and to allow the use of this model. Mobile Commerce conduct commerce using a
mobile device, such as a mobile phone, a Personal Digital Assistant (PDA), a smartphone, or other
emerging mobile equipment such as dashtop mobile devices.

Mobile commerce products and services that are available:

Mobile ticketing - tickets can be sent to mobile phones using a variety of technologies. Users are then
able to use their tickets immediately, by presenting their phones at the venue.

Mobile vouchers, coupons and loyalty cards - mobile ticketing technology can also be used for the
distribution of vouchers, coupons, and loyalty cards. These items are represented by a virtual token
that is sent to the mobile phone.

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Content purchase and delivery - mobile content purchase and delivery mainly consists of the sale of
ring-tones, wallpapers, and games for mobile phones. The convergence of mobile phones, portable
audio players, and video players into a single device is increasing the purchase and delivery of full-
length music tracks and video.

Location-based services - the location of the mobile phone user is an important piece of information
used during mobile commerce transactions.

Information services - a wide variety of information services can be delivered to mobile phone users
in much the same way as it is delivered to PCs. These services include: news, stock quotes, sport
scores, financial records and traffic reports.

Mobile banking - banks and other financial institutions use mobile commerce to allow their customers
to access account information and make transactions, such as purchasing stocks, remitting money.

Mobile StoreFront - mobile phone as a touch sensitive handheld computer has for the first time made
mobile commerce practically feasible

Mobile brokerage - stock market services offered via mobile devices have also become more popular.
They allow the subscriber to react to market developments in a timely fashion and irrespective of their
physical location.

Auctions - unlike traditional auctions, the reverse auction (or low-bid auction) bills the consumer's
phone each time they place a bid.

Mobile Browsing - with a mobile browser, customers can shop online without having to be at their
personal computer

Mobile Purchase - catalog merchants can accept orders from customers electronically, via the
customer's mobile device. In some cases, the merchant may even deliver the catalog electronically,
rather than mailing a paper catalog to the customer.

Mobile marketing and advertising - refers to marketing sent to mobile devices.

Modern Trade :Modern Trade (MT) in Indian trade parlance means set of outlets which are
normally chain of retail stores which may include supermarkets and hypermarkets which sell Fast
Moving Consumer Goods (FMCG) goods. Some companies also call such outlets as organized retail.
The first time such formats came into existence in the early 90s , from then on such outlets have been
growing steadily.

Regular Trade:These are outlets which are normally a single stand alone store selling FMCG
products and also are known as Pop & Mom Stores.

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Showrooming : Is it eating into sales at Retail Point of Sales?

Techopedia, defines showrooming as;

"Showrooming is when a shopper visits a store to check out a product but then purchases the product
online from home. This occurs because, while many people still prefer seeing and touching the
merchandise they buy, many items are available at lower prices through online vendors. As such,
local stores essentially become showrooms for online shoppers."

Although no formal academic definition of showrooming has been offered in the literature, a review
of the voluminous trade literature reveals three primary themes. First, showrooming is motivated by
consumers’ desire to get the best deal (Evans2012). This is not necessarily new; to some extent
consumers have always been driven by value seeking and/or referenceprices (Kalyanaram and Winer
1995). For certain purchases (e.g., higher price, greater complexity) consumers regularlycomparison-
shop, visiting multiple retail venues(Kushwaha and Shankar 2013). Second, after viewing and
handling products,consumers may purchase products elsewhere, including online retailers (Evans
2012; e-Marketer 2012). Although those purchasesmay be made at the retailer’s online site,
increasingly they are made at competitors’ sites (O’Donnell 2012). We proposethat this may be due in
large part to the third emergent theme, which is the proliferation of inexpensive mobile
technology(Spaid and Flint 2014).

Dr. Gary Edwards from Empathicacoined another word called Webrooming:

"Webrooming is the opposite behavior to 'showrooming.' With showrooming, retailers are faced with
the challenge of customers coming into the store to browse and test products, only to subsequently go
home and actually complete their purchase online (often through a competitor.) Webrooming, on the
other hand, is when consumers research products online before going into the store for a final
evaluation and purchase."

Showrooming Vs. Webrooming

Up until recently, there was a lot of gloom and doom talk about how showrooming was eating into the
profits of retailers, and that their was nothing they could do to combat its impact. However, retailers
have fought back and employed several means to offset showrooming's impact, and the result has
been the rise of web rooming.

According to a Harris poll in the U.S., 69% of people webroom, while only 46% showroom. Some of
the primary reasons for this have been offline retailers understanding the importance of omni-channel
selling, resulting in the adoption of an ecommerce storefront, in addition to a focus on providing a
better in-store customer experience. Whether that's through tactics like knowledgeable sales staff, in-
store pick-ups of online orders, in-store Wi-Fi, or smartphone discounts nudging shoppers to buy in-
store, webrooming is creating waves in retail.

A report by Merchant Warehouse had provided some great insights to help us better understand the
trend. According to them, here's a few reasons customers would webroom over showroom:

47% don't want to pay for shippings

23% didn't want to wait for the product to delivered

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46% like to go to a store to touch and feel a product before they buy
36% will ask the store to price match a better price found online
37% like the option of being able to return the item to the store if needed

Objective And Scope Of Study

This study was conducted to find the impact of showrooming on retail sales and its impact on
retailer brand loyalty. Since it is empirical in nature the study is confined to the customers,
distributors & retailers based in Coimbatore for the____________________________ brands.

Period Of Study

The study was conducted during the months of Oct ,Nov and Dec of 2016.

Hypotheses

The following hypotheses is formulated keeping in view the over all analysis of the data;.

1. The customers visiting the web portals( e-comm sites) are an exclusive group of people and
are no way connected to people visiting the showrooms
2. Quality of products being sold on the e commerce portals are at par with the goods sold in the
showrooms.
3. Price and schemes offered on products being sold on the e commerce portals are at par with
the goods sold in the showrooms.
4. There was no additional cost like shipping , packing etc being levied on products being
purchased from e-commerce portals.

Collection Of Data:

Primary Data:

Was collected through a survey conducted on customers, distributors & retailers.

Survey was done in the cities of Tamil Nadu( Chennai, Coimbatore, Madurai, Trichy, Salem)
For this purpose a questionnaire was designed , with the aim of collecting qualitative and
quantitative data.

Secondary Data:

Data has been collected from various web sites and journals and books of marketing have
been referred for the same.

Sampling:
Keeping in view the objective and scope of the study it was decided to do a sampling on the
basis of convenience cluster sampling.
Totally 150 retailers were interviewed for this study, Of this sample size; 100 were retailers
from modern trade,50 were retailers from regular trade handling various products spread
across TN.

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Limitation Of Study:

Due to limitation of time and resources the study was conducted on a sample size of only on
150 retailersin the states of TN.
The survey was conducted largely with the modern trade retailers , the views and impact of
the employees at these counters were only taken into effect.Thus the views of the owners
were not taken into effect and could be different from their employees.
Primary data was collected as per the questionnaire cannot be taken as 100 % accurate
Similarly 100% accuracy cannot be assumed in the secondary data collected from various
sources.

Tools Of Analysis:

For Analysis of data various statistical tools like percentages and averages have been used.
Number of Pie Charts have been used to present data.

Findings:

During our survey conducted on 150 retailers of various brands we noted that the following;

Business In Comparison To Previous 12 Months ( Apl -

Mar 2014-15 Vs Apl- Mar2015-16)

17%

83%

Retailers Whose Business Had Increased Retailers Whose Business Had Decreased

Fig :8 Comparison of Business Financial Yr 2014-16 Vs Financial Yr 2015-16

83 % of the retailers did say that their business had grown in comparison to the previous
financial year .
Of the 100 retailers surveyed 72% felt that prospective customers visited their showrooms but
did not return to buy , these retailers felt that the customers purchased the same products else
where probably online.

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Retailer Perception About Showrooming

18

72

Retailers who felt Showrooming Was happening

Retailers who felt Showrooming Was Not Happening

Fig No 9 Retailers Perception About Show rooming

64% of the modern trade outlets did feel that their customers were purchasing online after
seeing the products at their counters.

Modern Trade Retailer Perception

About Showrooming

32%

68%

Modern Trade Retailers who felt Showrooming Was happening

Retailers who felt Showrooming Was Not Happening

Fig No 10 Modern Trade Retailers Perception About Show rooming

36% of regular retail outlet did feel that their customers went away from their counter but did
buy online.

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Regular Trade Retailer Perception

About Showrooming

36%

64%

Regular Trade Retailers who felt Showrooming Was happening

Regular Trade Retailers who felt Showrooming Was Not Happening

Fig No 11Regular Trade Retailer Perception About Showrooming

72 % retailers said that people who leave their showrooms with out purchasing from their
show rooms but buying online were youngsters

% Of Youngsters Who Were Show Rooming

28%

72%

% Of Youngsters who were Showrooming

% Of Youngsters who were not Showrooming

Pic # 12:Share Of Youngsters Who Were Show Rooming

57 % retailers also reported that youngsters also come into their showrooms after checking
out for these products online and then finally end up buying from the stores.

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Percentage Of Young Customers Who Were Web

Rooming

43%

57%

% Of Youngsters who were Webrooming

% Of Youngsters who were not Web rooming

Fig No 13Young Customers Who Were Webrooming

Conclusions:

The following conclusions can be drawn from this study:

In an retail market which was growing comparing the previous year it was noted that 72% of
the retailers felt that they were loosing customers to showrooming. These customers were
checking out products at the retail showrooms but were not coming back to buy the product
from their shops.
The impact of showrooming was felt more by the modern trade retail outlets.64% of MT
outlets felt that they were loosing customers to showrooming.
Comparing modern trade outlets, regular retail out lets seemed to have lesser impact by
showrooming.36% of regular trade out lets felt that they were loosing customers to
Showrooming
Retailers informed that customers who were showrooming were predominantly young
customers .72% Retailers informed that the customers who were show rooming were youth.
A sizeable number of retailers also felt that many young customers who buy from their shops
had already visited online web sites and had technical knowhow about the product and this in
modern parlance amounts to webrooming.57%of retailers felt that youngsters were
webrooming.

Suggestions:

Showrooming is a pressing issue with regards to the retailers who have to spend a large
amount of money as rentals for the retail space. If the same is not addressed the retailer may
loose interest in the brand which can be extremely detrimental to the brand.
Showrooming is predominant with the younger generation, hence products which are
purchased by the youth can be impacted more by showrooming, hence brands which are into
selling products which address the needs of the youth need to be extremely careful about
showrooming.

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 INTERCONTINENTAL JOURNAL OF MARKETING RESEARCH REVIEW
ISSN:2321-0346 - ONLINE ISSN:2347-1670 - PRINT -IMPACT FACTOR :4.311
VOLUME 5, ISSUE 7, JULY 2017 UGC APPROVED JOURNAL - S.NO:43669

Modern trade outlets are impacted more by showrooming, this could be because the brands
spend a lot of resources training manpower at such outlets, more over the opportunity to touch
, feel and experience the product is more in modern trade outlets.
All is not bad at the retail , occurrence of webrooming also is equally prevalent, thus it is
suggested that brands must ensure that enough information is available about their products
on the digital medium, which could attract the younger generation to surf for information and
finally buy the product from retail outlets.

References

1. https://en.wikipedia.org/wiki/E-commerce
2. https://www.webpagefx.com/blog/general/the-evolution-of-ecommerce/
3. https://en.wikipedia.org/wiki/E-commerce_in_India
4. https://www.pwc.in/assets/pdfs/publications/2014/evolution-of-e-commerce-in-india.pdf
5. http://www.thehindubusinessline.com/business-wire/betaout-identifies-ecommerce-trends-
for-2017/article9449142.ece
6. https://www.techgig.com/tech-news/key-trends-for-indian-e-commerce-industry-in-2016-
41957?parm=editors-pick/key-trends-for-indian-e-commerce-industry-in-2016-41957
7. http://www.smartinsights.com/ecommerce/ecommerce-strategy/top-ecommerce-trends-
inform-2017-marketing-strategy/
8. https://www.tutorialspoint.com/e_commerce/e_commerce_b2b_mode.htm
9. https://www.entrepreneur.com/article/272162
10. https://www.pearsonhighered.com/samplechapter/0131735160.pdf
11. http://www.engineersgarage.com/articles/what-is-e-commerce
12. http://www.dynamicwebs.com.au/tutorials/e-commerce.htm
13. https://en.wikibooks.org/wiki/E-Commerce_and_E-Business/Concepts_and_Definitions
14. http://www.businessinsider.in/Reverse-Showrooming-Bricks-And-Mortar-Retailers-Fight-
Back/articleshow/30411064.cms

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