A

PROJECT
REPORT
ON

“E-Commerce Growth and challenges”

SUBMITTED TO- ATAL BIHARI VAJPAYEE NAGAR NIGAM DEGREE
COLLEGE
SURENDRA NAGAR, LUCKNOW-226016
(M.COM -106)
(SESSION 2024-25)

Submitted By- ATUL TRIPATHI

REGISTRATION NO:- 220259038

UNDER THE GUIDANCE OF:

DR. K M GOSWAMI
(ASSISTANT PROFESSOR)

DEPARTMENT OF COMMERCE

ATAL BIHARI VAJPAYEE NAGAR NIGAM DEGREE COLLEGE

SURENDRA NAGAR, LUCKNOW-226016

(SIGNATURE OF THE EXAMINER)

 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher Dr.

AK Goswami as well as our principal who gave me the golden opportunity to do this
wonderful project on the topic E-Commerce Growth and challenges, which also helped me
in doing a lot of research and I came to know about so many new things.
I am really thankful to them.
Secondly, I would also like to thank my parents and friends who helped me a lot in finishing
this project within the limited time.

I am making this project not only for marks but to also increase my knowledge.
THANKS AGAIN TO ALL WHO HELPED ME

Signature of Student
DATE- 28.03.2025
PLACE: Lucknow
( ATUL TRIPATHI )
REGISTRATION NO:- 220259038
 DECLARATION

I do hereby declare that this project report entitled “E-Commerce Growth and challenges” is
for award of degree of POST-GRADUATION IN COMMERCE. The report is based on the
study undertaken by me, to the best of my knowledge and belief it has not been published
earlier elsewhere or presented to any University/ Institution for award of any degree, diploma
or other similar title. The information used in the study report is collected from various
articles, websites, annual reports and published books.

Signature of Student
DATE- 28.03.2025
PLACE: Lucknow
( ATUL TRIPATHI )
REGISTRATION NO:- 220259038
 ABSTRACT

Electronic Commerce is process of doing business through computer networks. A person

sitting on his chair in front of a computer can access all the facilities of the Internet to buy or
sell the products.
Unlike traditional commerce that is carried out physically with effort of a person to go &
get products, ecommerce has made it easier for human to reduce physical work and to save
time. E-Commerce which was started in early 1990’s has taken a great leap in the world of
computers, but the fact that has hindered the growth of e-commerce is security. Security is
the challenge facing e-commerce today & there is still a lot of advancement made in the field
of security.
The main advantage of e-commerce over traditional commerce is the user can browse
online shops, compare prices and order merchandise sitting at home on their PC.
For increasing the use of e-commerce in developing countries the B2B e-commerce is
implemented for improving access to global markets for firms in developing countries. For a
developing country advancement in the field of e-commerce is essential. The research
strategy shows the importance of the e-commerce in developing countries for business
applications.
 CONTENTS
CHAPTER PARTICULARS PAGE NO
NO.
1. i. Introduction 1-8
ii. Objective of the study
iii. Scope of the study
iv Advantages of the study
v. Disadvantages of the study
vi. Chapter plan
2. Review of Literature 9-10
3. Research Methodology 11
4. Data analysis, Interpretation and Results 12-40
5. Conclusion 41
Bibliography 42
 CHAPTER – 1
INTRODUCTION
Introduction of E-Commerce:
We are living in e-century. The Internet and information and communications
technologies (ICT) are central to economic growth and productivity. Internet-based
technologies and networks can increase productivity, decrease costs and open new market
opportunities.
Now-a-days, using the Internet and email to conduct business is not uncommon.
However, lack of technical and management skills in Information and Communications
Technology is a barrier. There are a wide variety of resources available to help you to
improve your e- commerce skills. Simply, decide what skills you need and identify the
appropriate resources to help you to build those skills.
The skills that may be required range from basic abilities, like word processing and
Internet navigation, to more complex capabilities such as designing and building websites and
database management.
There are a range of resources to help you broaden your understanding of the e-
commerce environment and develop your technical skills. These include online resources,
books and magazines, seminars and training courses.
E-commerce means using the Internet and the web for business transactions
and/or commercial transactions, which typically involve the exchange of value (e.g., money)
across organizational or individual boundaries in return for products and services. Here we
focus on digitally enabled commercial transactions among organizations and individuals.
E-business applications turn into e-commerce precisely, when
an exchange of value occurs. Digitally enabled transactions include all transactions mediated
by digital technology and platform; that is, transactions that occur over the Internet and the
web.
Hence, e-tailing is a subset of e-commerce, which encapsulates all
“commerce” conducted via the Internet. It refers to that part of e-commerce that entails the
sale of product merchandise and does not include sale of services, namely railway tickets,
airlines tickets and job portals.
The term e-commerce was coined back in the 1960s, with the rise of electronic

1
commerce, the buying and selling of goods through the transmission of data – which was
made possible by the introduction of the electronic data interchange. Fast forward fifty years.
and e-commerce has changed the way in which society sells goods and services.

The history of E-commerce begins with the invention of the

telephone at the end of last century.EDI (Electronic Data Interchange) is widely viewed as the
beginning of ecommerce if we consider ecommerce as the networking of business
communities and digitalization of business information. Large organizations have been
investing in development of EDI since sixties. It has not gained reasonable acceptance until
eighties. The meaning of electronic commerce has changed over the last 30 years.
Originally, electronic commerce meant the facilitation of commercial
transactions electronically, using technology such as Electronic Data Interchange (EDI) and
Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing
businesses to send commercial documents like purchase orders or invoices electronically.
The growth and acceptance of credit cards, automated teller machines (ATM) and telephone
banking in the 1980s were also forms of electronic commerce. Another formof E-commerce
was the airline and railway reservation system.
Online shopping, an important component of electronic commerce
was invented by Michael Aldrich in the UK in 1979. The world’s first recorded business to
business was Thomson Holidays in 1981. The first recorded Business to consumer was
Gates head SIS/Tesco in 1984. During the 1980s, online shopping was also used extensively
in the UK by auto manufacturers such as Ford, General Motors and Nissan. The systems
used the switched public telephone network in dial-up and leased line modes. Online
shopping, an important component of electronic commerce was invented by Michael
Aldrich in the UK in 1979. The world’s first recorded business to business was Thomson
Holidays in 1981. The first recorded Business to consumer was Gates head SIS/Tesco in
1984. During the 1980s, online shopping was also used extensively in the UK by auto
manufacturers such as Ford, General Motors and Nissan. The systems used the switched
public telephone network in dial-up and leased line modes.
Although the Internet became popular worldwide around 1994 when the
first internet online shopping started, it took about five years to introduce security
protocols and DSL allowing continual connection to the Internet. By the end of 2000,
many European and American business companies offered their services through the
World Wide Web. Since then people began to associate a word “E-commerce” with
the
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ability of various goods through the Internet using secure protocols and electronicpayment
services.
The Internet was conceived in 1969, when the Advanced Research
Projects Agency (a Department of Defense organization) funded research of computer
networking. The Internet could end up like EDI without the emergence of the World Wide
Web in 1990s. The Web became a popular mainstream medium (perceived as the fourth
mainstream medium in addition to print, radio and TV)in a speed which had never been seen
before. The Web users and content were almost doubled every a couple of months in 1995
and 1996.
The Internet has changed the way we live our lives in major ways and in simple
ones, from how we connect with our loved ones to how we order our food. In the commerce
space, consumers are more informed than ever and while online shopping is a ubiquitous
thing, the data every shopper has access to at their fingertips or in their pockets has even
changed the game for in-store purchases.
A study by Deloitte University Press reported the number of shoppers who have already made
a purchase decision before setting foot in a retail space is on the rise. Not-so-surprisingly, this
percentage is markedly higher when involving high-investment purchases like electronics or
home furnishings. The number of shoppers in these categories who have done their research
offsite (or, rather, on a website) has actually surpassed the number of individuals who go into
a store “blind” to look at different options before deciding what to buy.
Even for smaller purchases where browsing in-store may still be
appealing to shoppers, it’s likely they’re still getting some assistance from the treasure trove
of consumer-driven content online, as many opt to research products on a mobile device
while looking at the items in-store, reading reviews and comparing features to help ensure
they’re making the best decision.

Fewer and far between are purchases made without the help of the
hundreds or thousands of data points available online for any given product, and more than
ever people are skipping the retail experience altogether and making any purchase they can
online.

Objective of the study:

 To have conceptual idea about E-Commerce:

The main objective of the study is that it is the buying and selling

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 process of goods and services, or the transmitting of funds or data, over an electronic
network, primarily the internet.

 Role of E-commerce in developing and developed countries:

E-commerce has the ability to play an instrumental role in helping developing

economies benefit more from trade. Unlike the requirements necessary to run
a business from a physical building, e-commerce does not require storage space,
insurance, or infrastructure investment on the part of the retailer.

E-business continues to grow vigorously in developed countries, but

divergences are surfacing among developing countries, says E-commerce and
Development Report 2003 (1), released today. More and more governments and
businesses in the developing world are nonetheless beginning to eliminate obstacles
to the adoption of information and communications technologies (ICT). While the
immediate effects are not necessarily dramatic, the Report predicts that
improvements in the e-business environment should eventually result in productivity
gains in these economies. At the same time, many other developing countries still
face difficulties in identifying and realizing the potential benefits of ICT and the
Internet for their economic development

Scope of the study:

Today, online shopping is a reality in India. The market place is flooded with
several e- commerce options for shoppers to choose from. From 2014, the growth of e-
commerce industry in India has been phenomenal as more shoppers have started discovering
the benefits of using this platform. There is enough scope for online businesses in the future
if they understand the Indian shopper’s psyche and cater to their needs. Listed below are the
reasons that guarantee the future prospect of E-commerce in India.
 Enhancing domain registrations
 Rising internet users
 Easy access to internet
 Awareness about internet even in rural areas
 Rising number of cyber cafes
 Growing need for E-commerce
1. Cash on Delivery (COD):

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 Indian e-commerce industry has evolved over a period of time with
innovations that have changed the rules of the game globally. COD is one such example.
In a country where credit card penetration is much lower than other developed markets
and where e-commerce companies are still working hard to build trust among shoppers,
introducing cash on delivery has been one of the key factors for the success of the
segment. At present, COD is the preferred payment mode for close to 55-60% of all
online transactions in the fashion and lifestyle segment in India. Executing COD
efficiently and painlessly for the customer is critical to the success of any e- commerce
player in the country.
2. Delivering experiences:
E-commerce needs to focus on customer experience to build trust and
confidence. Customer experience encompasses every interaction of a customer from
placing an order to interacting with customer service team, to the actual delivery
experience. Providing a great delivery experience is one of the core aspects to delighting
customers. This not only mean faster deliveries but also consistency and reliability. The
more faith the customer has in your delivery service, the more likely he is to buy again.
Besides, it builds a good brand image and word-of- mouth publicity.
3. Growing the Base:
India has more than 130 million online users at present, out of which as many as
10% are engaging in online transactions. The online user base is expected to cross 300
million in the next 2 – 3 years and a larger percentage of people are expected to transact
online by the end of 2015. This large base will provide vast scope for e-commerce
businesses to establish themselves in India.
4. Growing Opportunities:
E-commerce industry is growing at a rapid pace and changing the dynamics of
the retail industry. In the coming years, e-commerce is expected to contribute close to 8-
10% of the total retail segment in India. This growth is bound to continue provided e-
commerce companies focus on innovating, building strong technology infrastructure and
delivering the best customer experience.
5. Online Travel Segment:
The online travel segment has seen a CAGR of 55.5% from 2007-2012. This
is due to rise of disposable income, surge in demand for domestic travel and the boom
of the tourism industry. Domestic travel contributed to as much as 50% of the total
market.
5
6. E-Tailing:
E-tailing encompasses buying consumer items like apparels, electronic devices,
home and kitchen appliances, jewellery, online. Competition is intense due to low entry
barrier of this segment. However, Amazon.com, Flipkart.com, Snapdeal.com, Jabong.com,
and Myntra.com are some of the major players. This segment is expected to grow further
as people become more pressed for time. Also the choice that e- tailing sites offer to
customers will drive demand for this segment. However, there will be intense price based
competition in this sector and consolidations are in the order.

7. Online financial services.

The financial services segment includes applying for insurance, paying online
bills, and premiums and online transactions for financial services. The costs of these
insurance policies are lesser with premiums being 40%-60% cheaper. This is a win-win
situation for both the insurance provider and the customers. Also the convenience
provided by online portals has led to more customers choosing theonline route for bill
payment.
8. Classifieds:
It is in a very promising stage and has lot of scope for growth. Online advertising is
lot cheaper than conventional methods and unlike the later, it is not constrained to a
geographic location. The growth is mainly fuelled by services like online job (60% of the
segment), online matrimony, B2C classifieds and B2B classifieds. Naukri.com,
timesjob.com, monster.com are the major players in the job market while jeevansathi.com,
shaadi.com are the major matrimonial sites.
9. Other Online Services:
These include sites offering online services like buying entertainment tickets, food and
grocery.

Advantages of the study:

Electronic commerce can increase sales and decrease costs. Advertising done well
on the web can get even a small firm’s promotional message out to potential consumers in
every country in the world. A firm can use electronic commerce to reach narrow market
segments that are geographically scattered. The web is particularly useful in creating virtual
communities that become ideal target markets for specific types of products or services. A
virtual community is a gathering of people who share a common interest, but instead of this

6
gathering occurring in the physical world; it takes place on the

internet. Some key benefits of e-commerce are summarized below:

 By becoming e-commerce enabled, businesses now have access to people all around
the world. In effect all e-commerce businesses have become virtual multinational
corporations.

 The cost of creating, processing, distributing, storing and retrieving paper-based

information has decreased.

 The pull-type processing allows for products and services to be customized to the
customer’s requirements.

 Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain

management – this is based on collecting the customer order and then delivering
through JIT (just-in-time) manufacturing.

 The Internet is much cheaper than value added networks (VANs) which were based
on leasing telephone lines for the sole use of the organization and its authorized
partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialing.

 Software and music/video products can be downloaded or e-mailed directly to

customers via the Internet in digital or electronic format.

 Businesses can be contacted by or contact customers or suppliers at any time.

 24/7 access: Enables customers to shop or conduct other transactions 24 hours a day,
all year round from almost any location.

 Customers not only have a whole range of products that they can choose from and
customize, but also an international selection of suppliers.

 Customers can ‘shop’ around the world and conduct comparisons either directly by
visiting different sites, or by visiting a single site where prices are aggregated from a
number of providers and compared (for example www.moneyextra.co.uk for financial
products and services).

Disadvantages of the study:

The study of E-Commerce is a broad.. Though it has benefits it has limitation also. It
is not possible for any market study to make it accurate due to many hurdles in the collection

7
and computation of data. Some limitations of the study are listed below.

 Findings of the study are based on assumptions.

 Time was a major constraint.

 Shortage of finance is the major hurdle.

Chapter Plan:
The present study is divided into 5 chapters as follows.
 Chapter-1: Introduction
 Chapter-2: Review of literature
 Chapter-3: Research methodology
 Chapter-4: Data analysis, interpretation and results
 Chapter-5: Discussion and conclusion

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 CHAPTER-2
REVIEW OF LITERATURE

 J. Christopher Westland studied that electronic Commerce Research serves as a catalyst

for new research and a forum for disseminating the latest findings in all facets of electronic
commerce. The journal’s broad scope encompasses core enabling technologies as well as the
implications of these technologies for societies, economies, businesses, and individuals.
Readers will find a host of important theoretical and empirical research findings that are
leading the way to a better understanding of electronic commerce and its impact.
A sampling of topics as they relate to the internet and electronic commerce
include intelligent agents technologies and their impact; economics of electronic commerce;
virtual electronic commerce systems; service creation and provisioning; supply chain
management through the internet; collaborative learning, gaming, and work; and workflow
for electronic commerce applications.

In addition to its regular issues, the journal publishes periodic issues devoted to
a single subject area.

 Raven et al. compared India and China’s approaches in adoption of e-business. Based on the
literature survey and secondary data, the study analysed various factors influencing the
growth of e-businesses in the two countries. The factors examined includes government
policy and focus, existing technology and infrastructure regulatory environment, experience
and understanding of business operations and culture among others. The study concludes that
China appears to be ahead of India in the infrastructure, but India is ahead in e-readiness,
however, problem of poverty and inequality between urban and rural connectivity must be
resolved to really take advantages of e-business in both the countries.

 Study by Tarafdar and Vaidya examined the factors that determine the organisational
inclination to adopt e-commerce. The study proposes a frame work based on the qualitative
data on four financial firms in India collected through multiple case study design. Face to
face interview was used to collect primary data and existing database, company documents,
press reports and websites are used to collect secondary data. The framework describes to
broad factors – leadership, characteristics and organisational characteristics – to explain the

9
 influence of organisational factors on the propensity to employ EC technology. The study
found that both leadership and characteristics influence EC adoption.

 Viswanathan and Pick examined the issue of e-commerce in India from the framework of
developing countries as suggested by Tallon and Kraemer. The framework included critical
factors that might impact the diffusion of e-commerce. The factors are government policies,
legal framework, technology infrastructure, relationship with developed economies and
extent of e-commerce uses by individual, corporate and government.

 Dasgupta and Sengupta paper on e-commerce in Indian insurance industry discusses the
features of e-insurance in comparison with the traditional offline insurance service. The
author put forth that e-insurance offers benefits such as reduction in search, cost and hidden
cost, price comparison for customers and benefits such as opportunity to have niche of the
market, fast mover advantage and product bundling for insurance companies going online.

10
 CHAPTER-3
RESEARCH METHODOLOGY

The research is based on secondary data. There is no primary data. The secondary data analysis
involves the analysis of an existing data set which had previously been collected by another
researcher usually for a different research question. Secondary data analysis is widely used by
researchers undertaking and it is analysis of qualitative data, and has begun to be applied to
qualitative data. The data are subject to analysis with the help of simple statistical tools like ratios,
percentages and graphs.

Sources of secondary data:

There are also many other sources to collect the secondary data and mainly the
secondary data have already been collected by someone and published through many sources such
as:

 Magazines

 Newspapers

 Research’s

 Term papers

 Booklets

 E-Libraries

 Journals

 Websites

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 CHAPTER-4
DATA ANALYSIS, INTERPRETATION AND RESULTS
Meaning:

E-Commerce or Electronics Commerce is a methodology of modern business which

addresses the need of business organizations, vendors and customers to reduce cost and improve
the quality of goods and services while increasing the speed of delivery. E-commerce refers to
paperless exchange of business information using following ways.
 Electronic Data Exchange (EDI)
 Electronic Mail (e-mail)
 Electronic Bulletin Boards
 Electronic Fund Transfer
 Other Network-based technologies
The concept of e-commerce is all about using the internet to do business better and

faster. E-commerce is the process of buying and selling over the Internet, or conducting any
transaction involving the transfer of ownership or rights to use goods or services through a
computer-mediated network without using any paper document.
Electronic commerce or e-commerce refers to a wide range of online business activities
for products and services. It also pertains to “any form of business transaction in which the parties
interact electronically rather than by physical exchanges or direct physical contact.”
Business transacted through the use of computers, telephones, fax machines,
barcode readers, credit cards, automated teller machines (ATM) or other electronic appliances
without the exchange of paper-based documents. It includes procurement, order entry, transaction
processing, payment authentication, inventory control, and customer support.
E-commerce is subdivided into three categories: business to business or B2B
(Cisco), business to consumer or B2C (Amazon), and consumer to consumer or C2C (eBay) also
called electronic commerce.
E-commerce the phrase is used to describe business that is conducted over the Internet
using any of the applications that rely on the Internet, such as e-mail, instant messaging, shopping
carts, Web services, UDDI, FTP, and EDI, among others.
A type of business model, or segment of a larger business model, that enables a firm
or individual to conduct business over an electronic network, typically the internet. Electronic
commerce operates in all four of the major market segments: business to business, business to
consumer, consumer to consumer and consumer to business.
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Definitions:
The definition of e-commerce includes business activities that are business-to-business (B2B),
business-to-consumer (B2C), extended enterprise computing (also known as "newly emerging value
chains"), d-commerce, and m-commerce.
Ecommerce is simply a part e-business, more specifically, the trading aspect of e- business.
Although there are many definitions and explanations of e-commerce, the following definition
provides a clear distinction. There are many definitions and understanding about E- Commerce.
They are as follows:
1. According to the editor-in-chief of International Journal of Electronic Commerce, Vladimir
Zwass,‘Electronic commerce is sharing business information, maintaining business relationships
and conducting business transactions by means of telecommunications networks’.
2. Electronic Commerce is where business transactions take place via telecommunications
networks, especially the Internet – E. Turban, J. Lee, D. King and H.M. Chung,
3. Electronic commerce is about doing business electronically – P. Timmers
4. Electronic commerce or e-commerce refers to a wide range of online business activities for
products and services – Anita Rosen
5. It pertains to “any form of business transaction in which the parties interact electronically rather
than by physical exchanges or direct physical contact.” – MK, Euro Info Correspondence Centre
(Belgrade, Serbia),
6. E-commerce is usually associated with buying and selling over the Internet, or conducting any
transaction involving the transfer of ownership or rights to use goods or services through a
computer-mediated network. – Thomas L. Mesenbourg
7. A more complete definition is: E-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 organizations, and between organizations and
individuals. – Emmanuel Lallana, Rudy Quimbo, Zorayda Ruth Andam, ePrimer

From reading it should be apparent that electronic commerce is more than online
shopping.

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Features:
Electronic commerce, or e-Commerce, refers to the purchasing and selling of goods or
services via electronic means, such as the Internet or mobile phone applications. It may also
refer to the process of creating, marketing, servicing and paying for services and goods.
Businesses, governments and the public can participate in e-Commerce transactions. The
following discussion will elicit the unique features of e- commerce. The unique features of e-
commerce technology include:
1. Ubiquity:
e-Commerce is ubiquitous, It is available just about everywhere and at all times by
using internet and Wi-Fi hotspot such as airport, coffee cafe and hill station places..
Consumer can connect it to the Internet at any time, including at their homes, their offices,
on their video game systems with an Internet connection and mobile phone devices. E-
Commerce is ubiquitous technology which is available everywhere Moreover, individuals
who have cell phones with data capabilities can access the Internet without a Wi-Fi
connection.
2. Global reach:
The potential market size is roughly equal to the size of the online population of the
world. E- Commerce Technology seamlessly stretches across traditional cultural and
national boundaries and enables worldwide access to the client. E-Commerce website has
ability to translate the multilingual websites as well as allow the access to visitors all over
the world, purchase products and make business interactions.
3. Universal standards:
The technical standards of the Internet are shared by all of the nations in the
world. The whole online tradition are growing and expanding their features in the world.
To development any kind of business need Internet and communication application which
make the business relationship more lovingly and attractive for secure business and
successful business.
4. Richness:
Users can access and utilize text messages and visual and audio components to send and
receive information. An individual may see information richness on a company's blog if a
postcontains a video related to a product and hyperlinks that allow him to look at or purchase
the product and send information about the post via text message or email.
5. Interactivity:
E-commerce technologies allow two-way communication between the merchant and
the consumer. As a result, e-Commerce technologies can adjust to each individual’s
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 experience. For example, while shopping online, an individual is able to view different angles of
some items, add products into a virtual shopping cart, checkout by inputting hispayment
information and then submit the order.

6. Personalization:
Technologies within e-Commerce allow for the personalization and customization of
marketing messages that groups or individuals receive. An example of personalization
includes product recommendations based on a user's search history on a Web site that allows
individuals to create an account
7. Information density:
The use of e-Commerce reduces the cost to store, process and communicate
information, At the same time, accuracy and timeliness increase; thus, making information
accurate, inexpensive and plentiful. For example, the online shopping process allows a
company to receive personal, shipping, billing and payment information from a customer all
at once and sends the customer's information to the appropriate departments in a matter of
seconds.
8. Social technology:
E-Commerce technology has tie up the social media networking application to
provide the best source of content sharing technology and e-Marketing systems. You can
share your content or data easily in just one click.
9. User-Generated content:
Social networks use e-Commerce technologies to allow members, the general
public, to share content with the worldwide community. Consumers with accounts can share
personal and commercial information to promote a product or service. When a company has
a professional social networking account, a member of the same social network has the
option of associating himself with the company or a product by saying he likes or
recommends it. When an individual updates his status on a social networking account, he
may also mention a product or company by name, which creates word-of-mouth advertising.
10. Customization:
With the use of E-commerce technology, the world is moving from mass-production
to mass-customization. Product customization ensures that goods are tailor made as per the
requirements and preferences of customers.
Like Dell Computers Website www.Dell.com enables the consumers to Mention
configuration of a Computer and then the product is made available and deliveredas per the
configuration ordered by the customer.
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11. Inter-Disciplinary in Nature:
Implementation of E-Commerce needs a lot of knowledge of managerial, technological,
social and legal issues. Besides this, understanding of consumer behavior, marketing tools and
financial aspects is as crucial as designing interactive E- Commerce websites.

12. Personalization:
Technologies within e-Commerce allow for the personalization and customization of
marketing messages that groups or individuals receive. An example of personalization
includes product recommendations based on a user's search history on a Web site that allows
individuals to create an account
13. Information density:
The use of e-Commerce reduces the cost to store, process and communicate
information, At the same time, accuracy and timeliness increase; thus, making information
accurate, inexpensive and plentiful. For example, the online shopping process allows a
company to receive personal, shipping, billing and payment information from a customer all
at once and sends the customer's information to the appropriate departments in a matter of
seconds.
14.Social technology:
E-Commerce technology has tie up the social media networking application to
provide the best source of content sharing technology and e-Marketing systems. You can
share your content or data easily in just one click.
15.User-Generated content:
Social networks use e-Commerce technologies to allow members, the general
public, to share content with the worldwide community. Consumers with accounts can share
personal and commercial information to promote a product or service. When a company has
a professional social networking account, a member of the same social network has the
option of associating himself with the company or a product by saying he likes or
recommends it. When an individual updates his status on a social networking account, he
may also mention a product or company by name, which creates word-of-mouth advertising.

16
Functions:
The following are five functions you should be doing daily in your e-commerce business.
1. Search Engine Optimization:

 Generate unique relevant content. Google loves unique content that is related to what your
site is all about. Ensure you are using good keywords you want to focus on.
 Every page should have an H1 tag around what is the focus of the page, such as a
product name, category name, or static content title. Use H2 tags as well for other
important page sections.
 Keywords in optimized page titles.
 Internal linking. Link keywords in your unique content to pages related to that
keyword. This is huge!!!
 Friendly URLs with related phrases. E.g. When talking about Zobrist’s eZcommerce solution,
the URL looks like this: http://www.zobristinc.com/our_solutions/eZ_Commerce/
2. Selecting New Product:
 Sell what the customer wants to buy, not what you want to sell! This is a common mistake,
especially when merchandisers are given a great price to sell a particular product. If nobody
wants to buy that product, it doesn’t matter what price you set it at.
 Find out what customers want. What is your value proposition on products you sell?
Capitalize on your niche!
3. Merchandise new productions:

 Pictures, pictures, pictures! It is very important to have high quality images of the products.

 Hero photos: if you have a big seller, feature it on a category

page with a hero image of the product.
 Promote latest releases in your newsletters and feature them in
categories or on your homepage.
 Market to customers who have purchased related items in the past.

4. Customer Service:

 Make your customers happy.

 Delivery orders on time.
 Ensure order accuracy.
 Reship promptly if a package failed to be delivered to the customer, if it damaged or it has
missing parts.

17
 Development of E-Commerce
There is no question that e-commerce has grown rapidly since the first
users started to browse the worldwide web in search of goods and services. Today, sales
realized over the internet represent a significant proportion of overall commercial sales. In
1991, the internet had less than 3 million users around the world and its application to e-
commerce was non-existent. Almost a decade later, by 1999, an estimated 300 million users
accessed the internet and approximately one quarter of them made purchases online from
electronic commerce sites, worth approximately US$ 110 billion. This year, global business-
to consumer e-commerce sales are set to pass the US$ 1.25trillion mark.
There are numerous types of commercial transactions that occur online, from
buying goods such as books or clothes to purchasing services such as airline tickets or
making hotel or car rental reservations. Since the main focus of this brochure is on how
SMEs use the internet, the discussion here concerns only a few services which relate closely
to SME economic activity. These include electronic communications in the area of business
to business (B2B), business to consumers (B2C), business to government (B2G) and mobile
e- commerce.

Business to business (B2B):

B2B is e-commerce between businesses such as between a manufacturer and a

wholesaler, or between a wholesaler and a retailer. This is the exchange of products, services,
or information between businesses rather than between businesses and consumers.
Global B2B transactions comprise 90 per cent of all e-commerce.
According to research conducted by the US-based International Data Corporation (IDC), it
is estimated that global B2B e- commerce, especially among wholesalers and distributors,
amounted to US$ 12.4 trillion at the end of 2012.If the expansion in e-commerce continues
at this rapid pace in developed markets as is expected, B2B and B2C e-commerce
transactions will account for about 5 per cent of all inter-company transactions and retail
sales by 2017.

Business to consumers (B2C):

B2C e-commerce entails businesses selling to the general public, typically

through catalogues that make use of shopping cart software. Although B2C e-commerce

18
receives a lot of attention, B2B transactions far exceed B2C transactions. According to the
IDC, global B2C transactions were estimated to reach US$ 1.2 trillion at the end of 2012,
ten times less than B2B transactions. Although B2C e- commerce accounts for only a
small share of e-commerce as a whole, it continues to grow. B2C e-commerce is highest in
Norway, Denmark, Sweden, the United Kingdom and the United States and covers mainly
computer related products, clothing and digitized products. Despite the low value of its
transactions, B2C e- commerce has received the most attention, partly because issues such
as consumer trust and data protection have received considerable concern from policy
makers.

Business to government (B2G):

Business to government (B2G) commerce is generally defined as e-commerce between
companies and the public sector. It refers to the use of the internet for public procurement,
licensing procedures, and other government related operations. In B2G e-commerce, the
public sector generally assumes the pilot role in establishing e-commerce in an effort to make
its procurement system more efficient. The size of the B2G e-commerce market as a
component of total e-commerce is still rather insignificant as government e-procurement
systems still remain comparatively undeveloped. B2B transactions far exceed B2C transactions.
According to the IDC, global B2C transactions were estimated to reach US$ 1.2 trillion at the end of
2012, ten times less than B2B transactions. Although B2C e-commerce accounts for only a small share
of e-commerce as a whole, it continues to grow. B2C e-commerce is highest in Norway, Denmark,
Sweden, the United Kingdom and the United States and covers mainly computer related products,
clothing and digitized products. Despite the low value of its transactions, B2C e- commerce has
received the most attention, partly because issues such as consumer trust and data protection have
received considerable concern from policy makers.

Business to government (B2G):

Business to government (B2G) commerce is generally defined as e-
commerce between companies and the public sector. It refers to the use of the internet for
public procurement, licensing procedures, and other government related operations. In B2G
e-commerce, the public sector generally assumes the pilot role in establishing e-commerce
in an effort to make its procurement system more efficient. The size of the B2G e-commerce
market as a component of total e-commerce is still rather insignificant as government e-
procurement systems still remain comparatively undeveloped.

19
Benefits of E-Commerce:
Electronic commerce can increase sales and decrease costs. Advertising done well on
the web can get even a small firm’s promotional message out to potential consumers in every
country in the world. A firm can use electronic commerce to reach narrow market segments that
are geographically scattered. The web is particularly useful in creating virtual communities that
become ideal target markets for specific types of products or services. A virtual community is a
gathering of people who share a common interest, but instead of this gathering occurring in the
physical world; it takes place on the internet.
Some key benefits of e-commerce are summarized below:

 By becoming e-commerce enabled, businesses now have access to people all around
the world. In effect all e-commerce businesses have become virtual multinational
corporations.
 The cost of creating, processing, distributing, storing and retrieving paper-based
information has decreased.
 The pull-type processing allows for products and services to be customized to the
customer’s requirements.
 Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain
management – this is based on collecting the customer order and then delivering
through JIT (just-in-time) manufacturing.
 The Internet is much cheaper than value added networks (VANs) which were based
on leasing telephone lines for the sole use of the organization and its authorized
partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialing.
 Software and music/video products can be downloaded or e-mailed directly to
customers via the Internet in digital or electronic format.
 Businesses can be contacted by or contact customers or suppliers at any time.

 24/7 access: Enables customers to shop or conduct other transactions 24 hours a day,
all year round from almost any location.
 Customers not only have a whole range of products that they can choose from and
customize, but also an international selection of suppliers.
 Customers can ‘shop’ around the world and conduct comparisons either directly by
visiting different sites, or by visiting a single site where prices are aggregated from a
number of providers and compared (for example www.moneyextra.co.uk for financial
products and services).

20
 This can range from the immediate delivery of digitized or electronic goods such as software
or audio-visual files by downloading via the Internet, to the on-line tracking of the
progressof packages being delivered by mail or courier.
 An environment of competition where substantial discounts can be found or value added, as
different retailers view for customers. It also allows many individual customers to aggregate
their orders together into a single order presented to wholesalers or manufacturers and
obtaina more competitive price.
 Enables more flexible working practices, which enhances the quality of life for a whole host
of people in society, enabling them to work from home. Not only is this more convenient
and provides happier and less stressful working environments, it also potentially reduces
environmental pollution as fewer people have to travel to work regularly.
 Enables people in developing countries and rural areas to enjoy and access products,
services, information and other people which otherwise would not be so easily available to
them.
 Facilitates delivery of public services like health services available over the Internet (on- line
consultation with doctors or nurses), filing taxes over the Internet through the Inland
Revenue website.
 A business can reduce the costs of handling sales inquiries, providing price quotes, and
determining product availability by using electronic commerce in its sales support and order-
taking processes.
 Electronic commerce provides buyers with a wider range of choices than traditional
commerce.

 Electronic commerce provides buyers with an easy way to customize the level of detail
in the information they obtain about a prospective purchase.
 Electronic payments of tax refunds, public retirement, and welfare support cost less to
issue and arrive securely and quickly when transmitted over the internet.
 Electronic payments can be easier to audit and monitor than payments made by cheque,
providing protection against fraud and theft losses.
 Electronic commerce can also make products and services available in remote areas.

21
Limitations of E-Commerce:
Most of the disadvantages of e-commerce stem from the newness and rapidly
developing pace of the underlying technologies. Some of the key disadvantages of are given
below:
 Return-on-investment is difficult to calculate.

 Many firms have had trouble recruiting and retaining employees with the technological,
design, and business process skills needed to create an effective electronic commerce
presence.
 Difficulty of integrating existing databases and transaction-processing software
designed for traditional commerce into the software that enables electronic commerce.
 Many businesses face cultural and legal obstacles to conducting electronic commerce.

 Lack of sufficient system security, reliability, standards and communication protocols.

 Rapidly evolving and changing technology, so there is always a feeling of trying to

‘catch up’ and not be left behind.
 Under pressure to innovate and develop business models to exploit the new
opportunities which sometimes leads to strategies detrimental to the organization. The
ease with which business models can be copied and emulated over the Internet increases
that pressure and curtails longer-term competitive advantage.
 Facing increased competition from both national and international competitors often
leads to price wars and subsequent unsustainable losses for the organization.
 Problems with compatibility of older and ‘newer’ technology. There are problems
where older business systems cannot communicate with web-based and Internet
infrastructures, leading to some organizations running almost two independent systems
where data cannot be shared. This often leads to having to invest in new systems or an
infrastructure, which bridges the different systems. In both cases this is both financially
costly as well as disruptive to the efficient running of organizations.
 Computing equipment is needed for individuals to participate in the new ‘digital’
economy, which means an initial capital cost to customers.
 A basic technical knowledge is required of both computing equipment and navigation of
the Internet and the World Wide Web.
 Cost of access to the Internet, whether dial-up or broadband tariffs.

22
.
 Physical contact and relationships are replaced by electronic processes. Customers are
unable to touch and feel goods being sold on-line or gauge voices and reactions of
human beings.
 A lack of trust because they are interacting with faceless computers.

 As people become more used to interacting electronically there could be an erosion of

personal and social skills which might eventually be detrimental to the world we live in
where people are more comfortable interacting with a screen than face to face.
 There is a potential danger that there will be an increase in the social divide between
technical haves and have-nots – so people who do not have technical skills become
unable to secure better-paid jobs and could form an underclass with potentially
dangerous implications for social stability.
 Reliance on telecommunications infrastructure, power and IT skills, which in
developing countries nullifies the benefits when power, advanced telecommunications
infrastructures and IT skills are unavailable or scarce or underdeveloped.
 As new technology states how you do dispose of all the old computers, keyboards,
monitors, speakers and other hardware or software?
 Facilitates Just-In-Time manufacturing. This could potentially cripple an economy in
times of crisis as stocks are kept to a minimum and delivery patterns are based on pre-
set levels of stock which last for days rather than weeks.

23
E-commerce opportunities and challenges

E-Commerce is presently an essential ingredient of India’s trade facilitation policy.

Since 1991, after economic reforms explicitly took place in India, the need to facilitate
international trade both through policy and procedure reforms has become the foundation
stone of India’s trade and fiscal policies. Resultantly, a technological revolution accompanied
by the wide spread use of the Internet, web technologies and their applications took place. E-
Commerce has changed and is still changing the way business is conducted around the world.
E-Commerce is one of the most exciting spaces for today’s global online
community, and India’s young start-up economy is along for the ride. In the less than three
months of 2011, Indian Venture Capitalists have already invested over $50 million in seven
e- commerce companies, a 400 percent increase over the same period just last year, which
reflects the potential of ecommerce industry in India for the upcoming years.
The developing countries have to face a number of challenges for the purpose
of utilizing the benefits of increasing incomes as well as the trade flows in e-commerce
business. The reasons behind the fact are a wide range of legal, technical and international
governance considerations need to be taken care of. In developing countries there are a lot of
people who still prefer retail stores where they can physically check out the products before
buying. The retail stores, on the other hand, provide a personal touch which is quite difficult to
be replaced with online selling. Even though you have a great e-commerce website design and
a good number of customers, the challenges of shipping remains a concern. There are a lot of
issues related to the lack of supply chain integration, delay in delivery along with a lack of
proper courier services, especially in the rural areas. This results in the frustration of the
customers and hence a major challenge.
Currency challenge is another major area of challenge that is faced bye-commerce
businesses. Different countries have different export as well as import specifications.
Thus, issues related to credit card limits and currency exchange rates play a negative role
in e- Commerce business thereby hindering the smoothness in the overall e-
commerce shopping.
Nowadays, e-commerce site development is done in such a way that it is able to
accept different payment options which makes it easier for the customers. The refund issue is
one of the major hindrances in the e-commerce businesses.

24
Opportunities:

There is a rising awareness among the businesses in India about the opportunities
offered by e-commerce. E-commerce provides a new place for connecting with consumers
and conducting transactions. Virtual stores operate round the clock.

a) Global Trade:

E-business is one of the major factors in the globalization of business. Other factors
include decreases in trade barriers, globalization of capital markets. Indian e-business has
grown at a compounded annual growth rate of 30% since FY09, and is expected to be $18
billion (around Rs 1, 11,600 cores) opportunity by FY15.

b) Virtual Businesses:

Business firms now have the ability to become virtual E-Business. Virtual business
uses electronic means to transact business as opposed to the traditional means of face to
facetransaction.

c) Lower search costs:

The Internet brings low search costs and high price lucidity. E-business has
proved to be highly cost effective for business concerns as it cuts down the cost
of marketing, processing, inventory management, customer care, etc.

d) Round the clock:

Customers can do transactions for the product or enquiry about any product/services
provided by a company anytime, anywhere from any location.

e) Greater Economic Efficiency:

Greater economic efficiency (lower cost) and more rapid exchange (high speed,
accelerated, or real-time interaction) are achieved with the help of e-business.
25
Challenges:

The growth of ecommerce volumes in India is attracting the attention of players around
the world. Despite lower per-capita purchasing power, the population still makes India one
of the most attractive emerging markets for ecommerce. But India is far from being a bed
of roses. Here are the top 8 challenges that ecommerce businesses face in India.

a) Indian customers return much of the merchandise they purchase online:

Indian customers return much of the commodities they purchase

online. E business in India has many first time buyers. This means that they have not yet
made up their mind about what to expect from e-business websites. As a result, buyers
sometimes fall prey to hard sell. But by the time the product is actually delivered, they
regret and return the goods. Returns are expensive for e-business companies, as reverse
logistics presents unique challenges. This becomes all the more complex in cross border
e- business.

b) Cash on delivery is the preferred payment mode:

Cash on delivery is the preferred payment mode. Low credit card access and
low trust in online transactions has led to cash on delivery being the preferred payment
choice in India. Unlike electronic payments, manual cash collection is painstaking, risky,
and expensive.

c) Payment gateways have a high failure rate:

Indian payment gateways have an unusually high failure rate by global

standards. E-Business companies using Indian payment gateways are losing out on
business, as several customers do not attempt making payment again after a transaction
fails.

d) Internet penetration is low:

Internet penetration is low. Internet penetration in India is still a small

fraction of what is there in a number of western countries. The quality of connectivity is
poor in several regions. But both these problems are on their last legs. The day is not far
when connectivity issues would not feature in a list of challenges to e-business in India.

26
e) Postal addresses are not standardized:

If an online order is placed in India, it is quite likely get a call from the
logistics company to ask about exact location. Clearly address is not enough.

f) Feature phones still rule the roost:

Though the total number of mobile phone users in India is very high, a
significant majority still use feature phones, and not smart phones. As a result this
consumer group is unable to make e-business purchases on the move. Though India is
still a couple of years away from the scales tipping in favor of smart phones, the rapid
downward spiral in the price of entry-level smart phones is an encouraging indication.

g) Logistics is a problem in thousands of Indian towns.

Given the large size of the country, there are thousands of towns that
are not easily accessible. The problem with logistics is compounded by the fact that cash
on delivery is the preferred payment option in India. International logistics providers,
private Indian companies, and the government-owned postal services are making a
valianteffort to solve the logistics problem.

h) Overfunded competitors are driving up cost of customer acquisition.

The long-term prospects for ecommerce companies are so exciting that some
investors are willing to spend irrationally high amounts of money to acquire market
share today. Naturally the Indian consumer is spoiled for choice.

27
 Effect of E-Commerce in Developing Countries:

Developing countries are home to more than 80% of the

world’s population, and are the site for growing use of e-commerce. There are theoretical
claims that e- commerce could bring significant benefits to firms in developing countries, but
we know very little empirically about the actual outcomes of e-commerce implementation
(Molla & Heeks, 2007).
There is tremendous potential for e-commerce in developing countries. While the
base of Internet use in these countries has been relatively low, the rate of growth has been
high. Between 2000 and 2011 developing countries’ Internet user population grew by more
than 1500% to roughly 1500 million as shown in Figure 1, increasing their global share of all
Internet users from 25% to75% (Mini Watts, 2013). Despite the apparent benefits derivable
from e-commerce adoption and use, Small to Medium Enterprises (SMEs) are slower to adopt
the technology compared to their large business counterparts.
This is particularly the case in developing economies such as Indonesia where
factors such as the lack of telecommunication infrastructure (Sheth & Sharma, 2005), low
average income of the population, the lack of credit card penetration (Hawk, 2004), as well as
cultural barriers (Hawk, 2004; Paul, 2002), further restrict the viability of using e-commerce
technologies.
Ironically, the rate of Internet users in the Middle Eat which includes mostlyArab
countries is very low 21.3% compared to the population, even less than the world average
21.9%, which is not the case in USA, and Canada where the rate exceed 70% of the
population(Figure 2). Therefore, as global competition increases, nations are forced to adopt
new trading practices in order to gain market share and increase export revenues.

Liberalizing and opening the economies has become an imperative

to survival in the global community, but one that also often jeopardizes local culture and
beliefs. The need to use more sophisticated methods, to improve the telecommunication
environment, to adopt common and harmonized procedures and standards, make electronic
commerce and other information technology solutions valuable options to pursue in
improving regional trade. Furthermore, the focus on implementing technology to enhance
trade at the regional level also presents an opportunity to increase total Arab trade without
sacrificing culture and beliefs.

28
Figure1. Internet users (in millions) in the world by geographic region

Figure2. World Internet penetration rates by geographic region

29
 Effect of E-Commerce in Developed Countries
E-business continues to grow vigorously in developed
countries, but divergences are surfacing among developing countries, says E-commerce and
Development Report 2003 (1), released today. More and more governments and businesses
in the developing world are nonetheless beginning to eliminate obstacles to the adoption of
information and communications technologies (ICT). While the immediate effects are not
necessarily dramatic, the Report predicts that improvements in the e-business environment
should eventually result in productivity gains in these economies. At the same time, many
other developing countries still face difficulties in identifying and realizing the potential
benefits of ICT and the Internet for their economic development.

In terms of Internet use, developing countries continue to grow faster

than developed countries: at the end of 2002, they accounted for 32% of the world´s 591
million Internet users, up from 28% the previous year, and could well represent 50% by
2008. These estimates, although far from ideal, provide a reasonably good indication of
whether the foundations of a "digital economy" exist in a given country. Countries where
such foundations do exist - whose governments have pushed the development of the
information society early on (such as Japan, Malaysia, Singapore and the US) - have
benefited from ICT much earlier, the Report finds. But for developing countries to catch up
with ICT developments globally, they must be committed at the highest political level, must
pay attention to implementation issues and must strike the proper balance between the roles
of the public and private sector in ICT development.

By most estimates used in the Report, over 95% of e-commerce takes place in
developed countries, with Africa and Latin America combined accounting for less than 1% of
the total. Business-to-business (B2B) transactions represent around 95% of all e-commerce
transactions worldwide. On a national basis, however, official statistics on e-commerce
transactions are unavailable in all but a handful of countries.

According to official statistics from the United States, B2B e-commerce is

concentrated in a few industry groups, dominated by manufacturing and merchant
wholesalers.The same sources put B2B e-commerce in the US at $995 billion for 2001, citing
a nearly 15% share of e-commerce in total B2B trade, with vigorous growth expected.

In several Asia-Pacific countries, B2B e-commerce is projected to grow

rapidly, from about $120 billion in 2002 to around $200 billion in 2003 and $300 billion by
30
 quoted by UNCTAD 2004, according to estimates.
In Latin America, the volume of B2B e-commerce is driven essentially by
developments in Argentina, Mexico and, most of all, Brazil, where the value of all B2B
onlinetransactions was approaching the
$12-billion mark in the first quarter of this year. The 30 largest Brazilian companies account for
90%of the country´s B2B e-commerce, and therefore for a significant share of the region as a
whole.

On the retail side, or business-to-consumer (B2C) e-commerce, among

the high-income market economies the share of Internet users buying online is highest in the
Nordic countries, the UK and the US. Internet retail sales remain a small though growing part
of total retail sales. While more and more consumers are using the Web to get information on
high- value products that they ultimately purchase offline, for some products, such as software,
books, entertainment bookings and travel-related services, online sales are becoming very
significant in these markets.
Among the developing regions, Asia-Pacific represents about 10% of globalB2C online
sales, the vast majority of them generated by Japan, Australia and the Republic of Korea. For
China´s large and fast-growing Internet population, lack of trust and the very limited availability
of credit cards are two commonly quoted obstacles to buying online. In Latin America, Brazil,
Argentina and Mexico remain the largest markets. Brazil has reached higher maturity as an
Internet market and represents between 50-and-60% of all Latin American online retail sales.
Few reliable data are available on Africa, but South Africa accounts for the lion´s share of e-
commerce on the continent

31
 China the biggest E-Commerce market

The Internet came to China in 1994, and in the past 20 years, it

has penetrated the country's industry and commercial sectors. Fundamental changes brought
by the Internet have been incorporated in the operations of traditional industry markets. In
recent years, China’s E-commerce sector has demonstrated an explosive growth momentum.
New innovations brought about by the application of E-commerce technologies have
stimulated entrepreneurship, to be benefit of SMEs. At the same time, China’s cross-border
E-commerce is opening up with the open strategy of "Going global strategy and bringing-in",
which has become a new engine of China's economic development.

The Government of China has played a key role in development process,

in terms of creating an environment for E-commerce to thrive and putting in place regulations
and policies to support the sector as it has developed. Researchers have described China's E-
commerce development in a series of phases. Based on the development of the main E-
commerce platforms in China, Mao Yuxin and Zhao Liang (2015) cite six phases:
germination, growth, accelerate, mature, outbreak, and transformation.1 Wang Baoyi (2017)
writes that, from the perspective of industry economic theory cycle, China's E-commerce
evolution has four periods: germination, growth, eruption and integration.2 Qi Ming and Sun
Zhongtao (2017) also identify four stages: independent, platform, ecological and value. Based
on the above research, this study divides E-commerce development into four stages marked
by milestones and major policies.

According to statistics from the China E-commerce Report, the Ali

Research Institute and the Avatar Large Data Processing Center, China's total E-commerce
transactions reached 28.9 trillion yuan in 2016 (excluding Hong Kong, Macao and Taiwan),
an increase of 38.9% compared to 20.8 trillion in 2015. According to calculations by the
research group, the average annual growth rate of China's E-commerce transactions is 38.2%
in the past five years. A single-day trading volume on the 11 November 2016 shopping
festival was more than 120.7 billion yuan and set a record of 50 billion yuan trading value in
two and a half hours. With its high growth trend, E-commerce had become a new bright spot
in China's economy. In 2014, with the NDRC and other departments of government, the
Ministry of Commerce carried out a national E-commerce demonstration city innovation
work setting up E-commerce model cities in 53 regions, identifying 34 demonstration bases
and 100 demonstration enterprises.
32
 2009 and 2010, during which the growth rate doubled and redoubled.
Compared with the growth rates of online shopping and the total retail sales of social consumer
goods, the former has been 87.8% since 2011 and the latter 14.7%. In 2001, online shopping
accounted for only 0.01% of total retail sales of consumer goods. After 15 years’ continuous
development, the proportion was 14.3% in 2016.From the ratio of online shopping to the total
retail sales of consumer goods, E-commerce had gone through three periods: breaking through
the 100 billion yuan mark and accounting for more than 1% in 2008; reached one trillion yuan
(5 %) in 2012; and two trillion yuan (10%) in 2014. The B2C model rose year after year. The
proportion of B2C accounted for by B2C and C2C has increased by more than 50% since 2015.
According to I Research consulting, B2C will become China's main E- commerce model in the
future. Another noteworthy change is the dramatic increase in the proportion of mobile E-
commerce purchases, from 1.5% in 2011 to 68.2% in 2016, thanks to the popularity of smart
phones.

Agriculture has been a particular beneficiary of E-commerce. The government’s

"Opinions on the deepening of rural reform to accelerate the modernization of agriculture"
emphasized that strengthening the E-commerce platform for agricultural products. The
Ministry of Commerce and the Ministry of Finance jointly launched the "E-commerce into
the rural comprehensive demonstration project", carrying out E-commerce application
demonstration projects in 56 districts of eight provinces and autonomous regions. A national
agricultural products information service platform linked the purchase of agricultural
products and sale through cooperation with large-scale agricultural products market and
chainsupermarkets. Fresh food E-commerce platforms, such as Taobao and Jingdong, joined
up with vertical e-businesses. For example, SF Express formed a fresh food venture with
China National Cereals, Oils and Foodstuffs Corporation. At the same time, farm to
consumer (F2C), consumer to business (C2B), consumer ordering from farm (C2F),
community supporting agriculture (CSA) and other new models have also appeared.

33
 Development of China’s E-Commerce Market
The Government of China has played a key role in
development process, in terms of creating an environment for E-commerce to thrive and
putting in place regulations and policies to support the sector as it has developed.
Researchers have described China's E-commerce development in a series of phases. Based
on the development of the main E- commerce platforms in China, Mao Yuxin and Zhao
Liang (2015) cite six phases: germination, growth, accelerate, mature, outbreak, and
transformation.1 Wang Baoyi (2017) writes that, from the perspective of industry
economic theory cycle, China's E-commerce evolution has four periods: germination,
growth, eruption and integration.2 Qi Ming and Sun Zhongtao (2017) also identify four
stages: independent, platform, ecological and value. Based on the above research, this
study divides E-commerce development into four stages marked by milestones and major
policies.

 The Initial Stage:

During the initial stage of China's e-business, 1996 to 2000, a small number
of innovators consider that the traditional business model can be combined with the
Internet, bringing huge business opportunities and profits, and the first Chinese E-
commerce enterprise emerge. According to statistics, 5.2% of the current E-commerce
platforms are established at this time. The first B2B E-commerce business in China,
Nanjing Focus Technology Development Company was established in Southeast
University in January 1996. The first vertical chemical website, directly providing in-
depth information on chemicals and related services was launched on October 1997 as
China's first vertical B2B site. China's first E-commerce website providers followed in
1999, many of which are the mainstay of China's E-commerce today. The 8848 website,
the earliest domestic B2C E-commerce site, the eBay network, the first C2C service
website, and Alibaba, whose main business was B2B, were also established in 1999. In
the same year, Dangdang started providing the first online bookstore service, while the
China Merchants Bank and China Construction Bank opened online banking businesses,
making online payment possible for the first time. In 2000, Joyo, the B2C industry
leader in China, was established. In April 2000, HC International launched a HC
business website, today known as the HC network. Since, the market layouts that Ali
dominated the market in South of China and HC dominated the north market in china
were formed.

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 The Accelerated Develop Stage:
The early 2000s ushered in an accelerated stage of China's E-
commerce, during which the sector expanded from enterprise services to personal
services, becoming an important trading channel for a large number of enterprises and
consumers. It is also a key period in online retail development. According to statistics
from the China Internet Network Information Center (CNNIC), the number of Internet
users in China reached 210 million people by December 2007, of which 46.4 million
were using online shopping sites, accounting for 22.1% of Internet users. The amount
spent on online shopping reached 56.1 billion yuan in the same year. The period saw a
huge rise in the number of Internet users.

In 2002, the US C2C E-commerce company eBay bought a 33%

stake of Each Net for US$ 30m, marking the first foreign capital to enter China’s E-
commerce sector. In May 2003, Alibaba invested 100 million yuan to establish Taobao,
its C2C business model. The establishment of Taobao set the stage for China's E-
commerce industry. Online commerce developed rapidly during this time. In August
2004, Amazon, a large US B2C platform, bought Joyo Net for US$ 75m. The Joyo
name was subsequently changed to "Amazon". In January 2004, "Jingdong Multimedia
Network" was established, as an E-commerce platform able to rival Ali in the B2C
sector. In October 2004, Alibaba launched Alipay using a third-party guarantee to
promote online payment services to improve the trust deficit in online payments and
long- distance purchases. In June of the same year, the first network business conference
was held in Hangzhou and, with it, the large scale C2C model came to China. In 2005,
Taobao signed a logistics supply agreement with YT Express. The three main problems
in the early development of China's E-commerce were tackled at this stage.

At the same time, new regulations came into force, including the
"Electronic Signature Law of the People's Republic of China", "online trading platform
for self-discipline norms", among others. In 2015, the State Council issued “Several
Opinions on accelerating the development of electronic commerce”. The State
Development and Reform Commission, the State Council Information Office jointly
issued the "E-commerce Development Five-Year plan" in 2007, which is the first time
that the State Council issued a national E-commerce development plan at the national
policy level.

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 The Standardization Stage:
The standardization stage of China's E-commerce lasted from 2008 to
2014. On the one hand, E-commerce was benefitting from China’s huge consumer
market. According to CNNIC statistics, the scale of China's online shopping reached
128.18 billion yuan in June 2008and it surged to 1.3 trillion yuan in 2012. In addition,
the government continued to launch E- commerce regulatory policies. The national
policy management system of the E-commerce industry gradually formed.

Key policies to promote E-commerce development in China appeared

during this time and most government departments launched policy management
systemsfor E-commerce. In 2009, the Ministry of Commerce issued the "E-commerce
model specification" and "online shopping service standard”. The State Council
underpinned itssupport for E-commerce in the 2010 "Government Work Report”. In the
same year, the State Administration for Industry and Commerce issued “Online
commodity trading and relevant service behavior management interim measures”. In
2011, the State Council formulated “the Guiding Opinions on the Development of E-
commerce at the 12th Five- Year Plan”, “the Guidance on the Establishment of National
E-commerce Demonstration Base”, “the Third Party E-commerce Transactions Platform
service specification”. In May 2011, the People's Bank of China announced the first 27
enterprises granted permission for payment transactions. On 27 December 2013, the
NPC Financial and Economic Committee organized a conference on establishing an E-
commerce law drafting group and established a timetable for China's E-commerce
legislation. The NPC required that the drafting group should prepare a legislative
outline by December 2014. In 2014, the State Administration for Industry and
Commerce and the Ministry of Industry and Information Technology jointly issued
"Opinions on strengthening the supervision and cooperation of domestic online
transactions, actively promoting the development of E-commerce", and the State
Administration for Industry and Commerce issued "network transaction management
approach". The General Administration of Quality Supervision, Inspection and
Quarantine issued the "E- commerce work product quality improvement action plan".
The People's Bank of China issued "Guidance on the development of mobile payment
business of People's Bank of China "

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 Improved systems of cross-border payment, logistics and other services, China's
cross-border E-commerce retail overseas consumer business (B2C/C2C) was booming.
A number of cross-border E-commerce platforms, such as Ali Express, flourished
during this period. Cross-border E-commerce retail business became a new model to
further open oversea markets. A large number of SMEs in China and network operators
began to directly participate in international trade, which was also undergoing
tremendous changes.

 The Globalization Stage:

On the basis of previous policies and regulations, the development of
China's E- commerce SMEs has gradually moved on from a "brutal growth" stage,
exhibiting an integrated and orderly development trend. Most regions in China
implemented a cross- border E-commerce development strategy in 2014. A large
number of cross-border E- commerce retail sales platforms saw explosive growth during
this period, such as Tamll.HK, Kaola, Jumei, Matou, and Red.

In April 2014, Jumei shares were traded on the New

York Stock Exchange. Jingdong went public on Nasdaq on May, becoming the second
largest business platform in China. Alibaba was listed on the New York Stock Exchange
on September and became the largest IPO in American history. It could be said that 2014
was the most influential year for China's global E-commerce. The majority of domestic
business platforms carried out their own global capital development strategy. At the
same time, many regions of China started to develop cross-border E-commerce.
Zhejiang Province, for instance, established a cross-border E-commerce work
mechanism, with Hangzhou and Ningbo as the main pilots for a management system and
set of rules on global cross-border E-commerce, especially a “single window” for
logistical and legal matters. Guangzhou Province created the first cross-border E-
commerce model city in South China. The local government formulated a special
Refund Guarantee Fund to support cross-border Ecommerce. Fujian Province’s "Cross-
border trade E-commerce work implementation programme in Fujian Province" focused
on the implementation of E-commerce cooperation between Fujian and Taiwan. Gansu
Province established a cross-border E-commerce platform to create an "online Silk
Road" selling special local products with the support of Holmes Border Cooperation
Center.
Guangxi Province promoted cooperation between China and Vietnam
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through E-commerce trade and cooperation. Heilongjiang Province listed the Suifenhe

38
border economic cooperation zone as a base of cross-border E-commerce development and
focused on opening cross-border trade with Russia.
Nine provinces of China have international borders. Six of them
prepared detail plans for the development of cross-border E-commerce. Three launched
support policies for supporting the development of cross-border E-commerce. June
2015, the State Council issued" Guidance on the promotion of cross-border E-commerce
healthy and rapid development", designed to accelerate the development of cross-border
E-commerce in China. At the international level, the Chinese delegation formally
entered the discussion process at the 30th session of the third working group of the
United Nations Commission on International Trade Law, held in Vienna on 20 October
2014.
The "ODR- integration vision of track one and track two- proposal from Chinese
delegation" was the first accepted by the UN commission since China started to
participate in drafting the working group's "Cross-border E-commerce Transaction
Dispute Resolution: Rules of Procedure". In the same year, China proposed the "Asia-
Pacific Economic Cooperation and Development Initiative for E-commerce" at the 22nd
APEC Economic Leaders' Informal Meeting held in Beijing on 11 November, which
was unanimously approved.

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Future Scope and Growth of E-Commerce
The growth of e commerce will be on two accounts: One is
due to the changes in the macro-economic parameters like disposable income, internet
penetration, inflow of investments, and the other due to segment specific factors.

 Macro-Economic Factors:

a) Personal Disposable Income will continue to rise:

According to the International Monetary Fund (IMF), personal

disposable income will rise; it signals that the purchasing power of the people and their
standard of living has increased. As a result, demand for goods and services are
expected to rise.
With more disposable income, the benefits of time saving offered by e-commerce
will lead to growth in the sector.

b) Number of active Internet users in India is poised to rise:

Internet penetration has increased by a CAGR of 30% from 2007. There

has been an increase in internet user base and such trend is expected to continue. This
will led to more advertisement on the digital media. As advertisements increase, the trial
rate and the repeat rate for online retailing is likely to increase. This will trigger growth
in both the travel and non travel segment due to more customer acquisition.

c) Demand for debit and credit cards will see a rise:

The demand for debit and credit cards has also seen a steady rise
over the last few years. Most of the banks now provide online banking and debit card
facility with every new account. With the financial inclusion drive by the RBI, the
number of bank accounts (and hence the number of debit cards) will definitely see a
rise. This coupled with rising disposable income will invariably lead to more online
transactions.

 Segment Specific Factors:

In the online travel segment, growth of the tourism industry and

demand of domestic travel will have positive externalities on the e-commerce industry.
With travel websites providing additional features like hotel booking and package tours, the
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convenience factor offered by these websites will lead to growth.

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 CHAPTER-5
CONCLUSION

E-commerce still represents one of the business methods that take advantage if done the
right way, even if the stock market and commodities fell, but E-Commerce still able to survive
and receive high transaction. E-commerce has a tremendous opportunity in the course of or
business in Malaysia. In addition, it is also to introducing new techniques and styles in a
transaction. Use the extensive E-Commerce in the Internet world is actually much better to bring
the goodness of the individual or the state.
E-Commerce has undeniably become an important part of our society. The
successful companies of the future will be those that take E-Commerce seriously, dedicating
sufficient resources to its development. E-Commerce is not an IT issue but a whole business
undertaking. Companies that use it as a reason for completely re-designing their business
processes are likely to reap the greatest benefits. Moreover, E-Commerce is a helpful
technology that gives the consumer access to business and companies all over the world.
In general, today’s businesses must always strive to create the next best
thing that consumers will want because consumers continue to desire their products, services
etc. to continuously be better, faster, and cheaper. In this world of new technology, businesses
need to accommodate to the new types of consumer needs and trends because it will prove to
be vital to their business’ success and survival. E-commerce is continuously progressing and is
becoming more and more important to businesses as technology continues to advance and is
something that should be taken advantage of and implemented. From the inception of the
Internet and e-commerce, the possibilities have become endless for both businesses and
consumers, creating more opportunities for profit and advancements for businesses, while
creating more options for consumers. However, just like anything else, e-commerce has its
disadvantages including consumer uncertainties, but nothing that can’t be resolved or avoided
by good decision-making and business practices.
At last the conclusion comes that day- by- day E-commerce getting lots of
success. Today many companies have adopted the e-commerce. Because e-commerce has
become the buzzword for successful businesses across the world, as also in India, So, it will be
concluding that in the future e- commerce is growing faster. That means in the future e -
commerce Is one most important key factor to success company.

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 BIBLIOGRAPHY

Websites:

 WWW. GOOGLE.COM

 WWW.SLIDESHARE.COM

 WWW.UNCDAT.COM

 WWW.ACADEMIA.EDU

 WWW.WIKIPEDIA.COM

Books:

 ‘E-Business and E-Commerce Management – Dave chaffey

 ‘Frontiers of Electronic Commerce’- Ravi Kalakota and Andrew B. Whinston

 ‘E-COMMERCE’- Shalu Porwal, Er. Meera Goyal, Dr. Sandeep Srivastava

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