E-Commerce in The Indian Economy of

E-COMMERCE IN THE INDIAN ECONOMY
VIVEKANANDA COLLEGE
TOPIC:
E-COMMERCE IN THE INDIAN

ECONOMY
A PROJECT SUBMITTED IN PARTIAL FULFILMENT
OF THE REQUIREMENT FOR DEGREE OF B.COM (H)
UNIVERSITY OF DELHI
PAPER CH6.3 (B)
BY
RUPALI WALIA
ROLL NO.2012034
UNIVERSITY ENROLMENT NO.VM/382/2012
2012-15
UNDER THE SUPERVISION OF
MRS. RADHIKA SRINIVASAN
(Mentor)
DECLARATION
This is to certify that the material embodied in this study entitled Ecommerce
in the Indian Economy is based on my own research work and my

indebtedness to other work/publications has been acknowledged at the relevant
places.
This study has not been submitted elsewhere either wholly or in part for award of
any degree.
Rupali Walia
(Students Name)
This is to certify that the project titled Ecommerce in the Indian Economy
done by Rupali Walia is a part of his/her academic curriculum for the degree of
B.Com(H). It has no commercial implication and is done only for academic
purpose.
Mrs. Radhika Srinivasan

(mentor)
Dept. of Commerce
ACKNOWLEDGEMENT
2
I am extremely grateful to my mentor, Mrs. Radhika Srinivasan of

Commerce Department, Vivekananda College, who provided valuable
comments and suggestions from time to time for the accomplishment of
my project. Her valuable encouragement made it possible for me to
complete the project in its present form.
I would also like to offer my regards and blessings to all of those who
supported me in any respect during the completion of this report. Their
valuable suggestions from time to time gave me consistent feedback
upon the same.
CONTENTS
3
OBJECTIVES OF THE STUDY

INTRODUCTION
LITERATURE REVIEW
Timeline
Rise of E-Commerce in India
Reasons Why Companies are Adopting E-Commerce
Laws and Regulations in India(briefly)
Top 10 E-Commerce Companies in India
Present scenario of Internet in our Country
Slow growth of E-Commerce Companies
Challenges Faced by E-Commerce Companies
E-Commerce Trend Booming in India
Company Profile of flipkart.com
CONCLUSION
BIBLIOGRAPHY
OBJECTIVES OF THE STUDY

To define e-commerce and its basic characteristics
To know about its evolution
To know the reasons for its success and failure
To know about its future growth prospects
INTRODUCTION
Electronic commerce, commonly known as e-commerce, is a type of industry
where buying and selling of product or service over electronic systems such as the
Internet and other computer networks takes place. Electronic commerce draws on
such technologies 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 at least
at one point in the transaction's life-cycle, although it may encompass a wider
range of technologies such as e-mail, mobile devices social media, and telephones
as well.
Electronic commerce is generally considered to be the sales aspect of e-business. It
also consists of the exchange of data to facilitate the financing and payment aspects
of business transactions.
TIMELINE
YEARS
1979
1981
1984
LITERATURE REVIEW
IMPORTANT EVENTS
THAT TOOK PLACE
MICHAEL ALDRICH INVENTED ONLINE SHOPPING

THOMSON HOLIDAYS, UK IS FIRST B2B ONLINE
SHOPPING
GATESHEAD SIS/TESCO IS FIRST B2C ONLINE

SHOPPING AND MRS SNOWBALL, 72, IS THE FIRST
ONLINE HOME SHOPPER
1990
TIM BERNERS-LEE WRITES THE FIRST WEB

BROWSER, WORLDWIDEWEB, USING A NEXT
COMPUTER
1994
NETSCAPE RELEASES THE NAVIGATOR BROWSER

IN OCTOBER UNDER THE CODE NAME MOZILLA.
PIZZA HUT OFFERS ONLINE ORDERING ON ITS
WEB PAGE.
THE FIRST ONLINE BANK OPENS.
ATTEMPTS TO OFFER FLOWER DELIVERY AND
MAGAZINE SUBSCRIPTIONS ONLINE.
JEFF BEZOS
1995
AMAZON.COM AND THE

FIRST COMMERCIAL-FREE 24 HOUR, INTERNETONLY RADIO STATIONS,
RADIO HK AND NETRADIO START
BROADCASTING.
DELL AND CISCO BEGIN TO AGGRESSIVELY USE
INTERNET FOR COMMERCIAL TRANSACTIONS.
EBAY IS FOUNDED BY COMPUTER PROGRAMMER
PIERRE OMIDYAR AS AUCTIONWEB.
LAUNCHES
1996
1998
INDIAMART B2B
INDIA.
ELECTRONIC
MARKETPLACE ESTABLISHED IN
POSTAL STAMPS CAN BE PURCHASED
AND DOWNLOADED FOR PRINTING FROM THE
1999
2000
THE PEER-TO-PEER FILE-SHARING

NAPSTER LAUNCHES.
ATG STORES LAUNCHES TO SELL
ITEMS FOR THE HOME ONLINE.
THE
WEB.
SOFTWARE
DECORATIVE
DOT-COM BUST
EBAY ACQUIRES PAYPAL FOR $1.5 BILLION.

NICHE RETAIL COMPANIES WAYFAIR AND
NETSHOPS ARE FOUNDED WITH THE CONCEPT
2002
OF SELLING PRODUCTS THROUGH SEVERAL

TARGETED DOMAINS, RATHER THAN A CENTRAL
PORTAL.
2003
AMAZON.COM
POSTS FIRST YEARLY PROFIT.
DHGATE.COM, CHINA'S
2004
TRANSACTION PLATFORM, IS
OTHER
B2B
"YELLOW
SITES TO MOVE AWAY FROM THE
PAGES" MODEL.
YUVAL TAL
2005
B2B
ESTABLISHED, FORCING
FIRST ONLINE
FOUNDS
PAYONEER -
A SECURE ONLINE
PAYMENT DISTRIBUTION SOLUTION
2007
2009
BUSINESS.COM ACQUIRED
FOR $345 MILLION
REPORTEDLY REJECTS A
OFFER FROM
GOOGLE. INSTEAD,
$6
BILLION
THE GROUP
IPO ON
LARGEST IPO
BUYING WEBSITES WENT AHEAD WITH AN
NOVEMBER 4, 2011. IT
SINCE GOOGLE.
2011
R.H. DONNELLEY
ZAPPOS.COM ACQUIRED BY AMAZON.COM FOR

$928 MILLION.
RETAIL CONVERGENCE, OPERATOR OF PRIVATE
SALE WEBSITE RUELALA.COM, ACQUIRED BY
GSI COMMERCE FOR $180 MILLION, PLUS UP
TO $170 MILLION IN EARN-OUT PAYMENTS
BASED ON PERFORMANCE THROUGH 2012
GROUPON
2010
BY
WAS THE
GSI COMMERCE, A COMPANY SPECIALIZING IN

CREATING, DEVELOPING AND RUNNING ONLINE
SHOPPING SITES FOR BRICK AND MORTAR
BUSINESSES, ACQUIRED BY EBAY FOR
$2.4
BILLION.
US E-COMMERCE
2012
2013
ONLINE RETAIL SALES

PROJECTED TO REACH $226 BILLION, AN
INCREASE OF 12 PERCENT OVER 2011.
US E-COMMERCE AND ONLINE RETAIL HOLIDAY
SALES REACH 33.8 BILLION, UP 13 PERCENT
AND
Indias worlds third largest internet user.
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RISE OF E-COMMERCE BUSINESS IN INDIA

Basic challenge
The e-commerce frenzy is booming in India nowadays, many e-commerce portals
are popping up every second in India. The biggest challenge in present scenario is
how to deal with the issues mushrooming amidst this growth? The main problem
plaguing the e-commerce business is- Lack of proper infrastructure and online
frauds.
Due to budget constraint many small business in India overlook the importance of
authentic software. Moreover, many small businesses are showing interest in
online business and most of them are not even aware of how to go about securing
and protecting their online business. Many online companies don't have a basic
antivirus on their servers. The rampant software piracy in India has made small
business vulnerable to spy and Trojan attacks. Many business use pirated software,
which has high chances of getting injected with malware, virus and bots. It is
extremely unsafe to use online transaction on such servers as bank and credit card
details could be easily stolen while doing the transaction. According to Norton,
half of the Indian Internet users are unaware of the online security solutions
available to them.
Overcoming these setback

A huge percentage Indian online market is impaired by these challenges. However,
there are few sectors like financial and banking sectors, have raised themselves
above these challenges successfully and they represent the real growth of India.
Many of the reputed banks and financial institution has beefed up their cyber
security by taking charge to control the online frauds. To protect their interest as
well as customers' interested, many reputed banks have beefed up their cyber
security by following the best practice in the industry such as implementing Secure
Socket Layer encryption. Banks are also educating their audience by sending them
SMSs and emails regarding secure online transactions. Some banks are also
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utilizing other medium of communication like newspaper and magazines and

having a prominent section dedicated to cyber security tips and suggestions.
The Reserve Bank of India has announced that they will take strict action against
the banks who do not implement guidelines on electronic security and operations
by 2012, this has been a very encouraging and legitimate stance towards the
progress of online security and discouraging online frauds. More over many ecommerce sites are now offering cash on delivery which is encouraging the users
to make more transaction with online stores.
There has been significant improvement done by ecommerce companies as well as
banks in India to encourage online purchase. Because of which there has been a
significant growth in online purchase which is essentially good for e-commerce
market in India.
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Reasons Why Companies are

Adopting
E-Commerce
Lower Cost
Doing e-business is cost effective; it reduces logistical problems and puts a small
business on a par with giants such as Amazon.com or General Motors. In a
commercial bank, for example.a basic over-the-counter transaction costs 0.50 to
process; over the Internet, the same transaction costs about 0.01. Every financial
transaction eventually turns into an electronic process. The sooner it makes the
conversion, the more cost-effective the transaction becomes.
Economy
Unlike the brickandmortar environment, in ecommerce there is no physical
store space, insurance, or infrastructure investment. All you need is an idea, a
unique product, and a welldesigned web storefront to reach your customers, plus
a partner to do fulfillment. This makes ecommerce a lot more economical.
Higher Margins
Ecommerce means higher margins. For example, the cost of processing an airline
ticket is 5. According to one travel agency, processing the same ticket online costs
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1. Along with higher margins, businesses can gain more control and flexibility
and are able to save time when manual transactions are done electronically.
Better Customer Service

Ecommerce means better and quicker customer service. Online customer service
makes customers happier. Instead of calling your company on the phone, the web
merchant gives customers direct to their personal account online. This saves time
and money. For companies that do business with other companies, adding customer
service online is a competitive advantage. The overnight package delivery service,
where tracking numbers allow customers to check the whereabouts of a package
online, is one good example.
Quick Comparison Shopping

Ecommerce helps consumers to comparison shop. Automated online shopping
assistants called hopbots scour online stores and find deals on everything from
apples to printer ribbons.
Productivity Gains
Weaving the web throughout an organisationmenas improved productivity. For
example IBM incorporated the web into every corner of the firm products,
marketing, and practices. The company figured it would save $750 million by
letting customers find answers to technical questions via its website. The total cost
savings in 1999 alone was close to $1 billion.
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Teamwork
Email is one example of how people collaborate to exchange information and
work on solutions. It has transformed the way organisations interact with suppliers,
vendors, business partners, and customers. More interactions means better results.
Knowledge Markets
Ecommerce helps create knowledge markets. Small groups inside big firms can
be funded with seed money to develop new ideas. For example, DaimlerChrysler
has created small teams to look for new trends and products. A Silicon Valley team
is doing consumer research on electric cars and advising car designers.
Information Sharing, Convenience, and Control

Electronic marketplaces improve information sharing between merchants and
customers and promote quick, justintime deliveries. Convenience for the
consumer is a major driver for changes in various industries. Customers and
merchants save money; are online 24 hours a day, 7 days a week; experience no
traffic jams, no crowds, and do not have to carry heavy shopping bags.
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LAWS AND REGULATIONS IN

INDIA (BRIEFLY)
E-commerce laws and regulations in India are still evolving. This has created a sort
of confusion and uncertainty among e-commerce entrepreneurs in India. While
some have opened e-commerce outlets through websites others are exploring a
more appropriate and legal way of running an e-commerce business in India.
Legal issues of e-commerce in India vary as per different business models. For
instance, electronic trading of medical drugs in India requires more stringent ecommerce and legal compliances as compared to other e-commerce activities.
Digital communication channels for drugs and healthcare products in India are
scrutinized more aggressively than other e-commerce activities. In fact, regulatory
and legislative measures to check online pharmacies trading in banned drugs in
India are already in pipeline.
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Besides there are many legal formalities that are required in order to start a
company and e-commerce activity in India.
Mostly people decide to open a private company to substantiate an e-commerce
activity. To incorporate a private limited company you must approve its name,
registered office address, have at least 2 directors with director identification
numbers (DINs), must have a minimum authorised capital of Rs. 1 lakh,
memorandum of association (MOA) and articles of association (AOA), digital
signature certificates (DSCs) wherever applicable, etc. Once these conditions and
requirements are fulfilled, a certificate of incorporation is sent by post to the
registered office of the newly registered company.
The private limited company is also required to comply with income tax related
compliances. These include obtaining permanent account number (PAN), tax
deduction account number (TAN), value added tax (VAT) registration and
obtaining of tax identification number (TIN), professional tax if applicable, service
tax, etc.
In certain cases, compliance with labour laws is also required. For instance, the
Shops and Establishment Act is a legislation implemented by various States in
India. The Act lays down mutual statutory obligation and rights of employers and
employees. Registration of shop/establishment is mandatory within 30 days of
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commencement of work. Other workmen and labour related legislations cover

areas like employees provident fund, employees state insurance, etc.
However, e-commerce in India is also required to be conducted in a legally
permissible manner. This is more so when the Information Technology Act 2000
(IT Act 2000) prescribes stringent penal and pecuniary penalties for violation of its
provisions during e-commerce transactions.
The e-commerce players must ensure cyber law due diligence in India. This is
more so when the cyber law due diligence for companies in India has become very
stringent and foreign companies and websites are frequently prosecuted in India for
non exercise of cyber due diligence.
The legal requirements for undertaking e-commerce in India also involve
compliance with other laws like contract law, Indian penal code, etc. Further,
online shopping in India also involves compliance with the banking and financial
norms applicable in India. For instance, take the example of PayPal in this regard.
If PayPal has to allow online payments receipt and disbursements for its existing or
proposed e-commerce activities, it has to take a license from Reserve Bank of
India (RBI) in this regard. Further, cyber due diligence for Paypal and other online
payment transferors in India is also required to be observed.
List of Top 10 E-commerce

Companies of India:(as on 02/07/2013)
1. Flipkart
Website: (www.flipkart.com)
Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka.
It was founded by Sachin Bansal and BinnyBansal in 2007. In its initial years,
Flipkart concentrated on online sales of books, but it later on expanded to
electronic goods and a diversity of other products. Flipkart offers multiple payment
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methods like credit card, debit card, net banking, e-gift voucher, and the major of
all Cash on Delivery. The cash-on-delivery model adopted by Flipkart has proven
to be of great significance since credit card and net banking penetration is very low
in India.
2. Snapdeal
Website: (www.snapdeal.com)
Snapdeal is a leading online marketplace, headquartered in New Delhi, India.
Snapdeal features products across categories like mobiles, electronics, fashion
accessories, apparel, footwear, kids, home and kitchen, sports, books; and services
like restaurants, spas & entertainment amongst others. The company was started by
KunalBahl, a Wharton graduate and RohitBansal, alumnus of IIT Delhi, in
February 2010. Snapdeal also provides discounted deals connecting with local
merchants.
3. Fashionandyou
Website: (www.fashionandyou.com)
Fashion and You is a private invitation only shopping club, based in Gurgaon,
India. It was founded by Harish Bahl in November, 2009. The fashion site features
collections by top designers for men, women and children for up to 80% off retail
prices. Fashion and You obtain authentic designer merchandise straight from the
brand and provides it exclusively to its members through limited-time events.
4. Myntra
Website: (www.myntra.com)
Myntra was established by MukeshBansal, AshutoshLawania, and VineetSaxena in
February 2007. All three are IIT graduates, and have worked for several start-ups.
Myntra is headquartered in Bangalore and has been funded by Venture Capital
funds like IndoUS, IDG &Accel Partners. Myntra.com works as an online
shopping retailer of fashion and casual lifestyle products. The company started off
in the business of personalization of products, and soon expanded to set up
regional offices in New Delhi, Mumbai and Chennai.
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5. Inkfruit
Website: (www.inkfruit.com)
Inkfruit is an online t-shirt store, where t-shirt designs are submitted and voted for
by a group of people. It was initiated in December 2007 (then called Gnome) by
Fingerprints Fashion Inc., based in Mumbai, India. KashyapDalal, an
undergraduate of IIT Bombay, and graduated from IIM Lucknow is the CEO of
Inkfruit. This concept is taken from Threadless to India by Inkfruit. The
community of Inkfruit submits t-shirt designs. These designs are put to vote on a
scale of 1 to 5. The design that receives most votes wins, gets printed and is put
for sale. The member whose design is selected gets paid a winning amount.
6. Dealsandyou
Website: (www.dealsandyou.com)
Dealsandyou is a deals website to find the best deals in Indian shopping. The site
provides offers for any one for local services such as full body massages or buffet
restaurants. Shopping using these deals in the website is a nice experience which
can save a great deal of money as well.
7. Homeshop18
Website: (www.homeshop18.com)HomeShop18 is the online and on-air retail and
distribution venture of Network 18 Group, headquartered in NOIDA, India.
HomeShop18 was launched on 9 April, 2008 as India's first 24-hour Home
Shopping TV channel, where anchors performed live demonstration of products on
sale. The television channel established HomeShop18's foothold in Indian retail
because of high television penetration. Later, as the internet reach grew all over the
country, HomeShop18 expanded to the internet.
8. Yebhi.com
Website: (www.yebhi.com)
Yebhi.com is an Indian Online shopping E-commerce portal for Home, Lifestyle &
Fashion e-retailer, launched in the year 2009. Yebhi, which began as
BigShoeBazaar.com, has a registered user base of about 1.5 million people, of who
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about half a million have transacted on the site. Nexus Venture Partners and N. R.
Narayana Murthys Catamaran Ventures invested 40 crore in Agarwals company
in mid-2011. On July' 10th 2012, Big Shoe Bazaar India Pvt Ltd. owner of Brand
Yebhi.com announced that it has raised 100 Cr in Series C round of funding led
by Fidelity Growth Partners India and Qualcomm.
9. Indiangiftsporta
Website: (www.indiangiftsportal.com)
Indian Gifts Portal is an online gifts super-market that makes sending a gift to your
dear ones a pleasure. It offers a wide range of gift-options, most of which are
exclusive Indian products, right on your desktop. On click of a mouse, you will
discover it is just the kind of gift store you've always been looking for.
10. Caratlane
Website: (www.caratlane.com)
Caratlane is India's first online jewellery store with an assorted range of diamond
jewellery designs to offer every customer. They offer more than 1,40,000 loose
diamonds, and over 1000 ready to choose diamond jewellery online like diamond
rings, pendants, earrings, bracelets, bangles and gold coins for all budgets. The
quality & authenticity of diamond jewellery is validated with BIS Hallmarking and
Certification from International labs like GIA, IGI, HRD and AGS. The website
offers discount up to 25 percent of prices.
PRESENT SCENARIO OF
INTERNET IN OUR COUNTRY
India is now worlds third largest Internet user after U.S.,
China.Three-fourths of its online population is under 35,
says comScore report.
India now has nearly 74 million Internet users, a 31 per cent increase over March
2012, the report says. The numbers are lower than other recent estimates, possibly
reflecting comScores methodology that only factors in PC and laptop-based
Internet usage. The Telecom Regulatory Authority of India (TRAI) pegged the
21
number of Internet subscribers in India at 164.81 million as of March 31, 2013,

with seven out of eight accessing the Internet from their mobile phones. The
comScore report, on the other hand, puts mobile and tabled-based Internet traffic at
just 14% of the total. Mobile phone based Internet usage is a key component of
Indian Internet usage, and Id say the recent growth is being driven by mobile
Internet usage, NilotpalChakravarti, spokesperson of the Internet and Mobile
Association of India told The Hindu on Thursday. In addition, many Netizens were
using dongles to access the Internet.
Three-fourths of Indias online population is under 35 as against just over half
worldwide, the comScore report, India Digital Future in Focus 2013, says, possibly
reflecting Indias more recent improvements in literacy. Men under 35 and women
between 35 and 44 are heavier users. But women account for less than 40 per cent
of all Indian users, a far lower sex ratio than that of other countries.
A quarter of time spent online is on social media, the comScore report says, and
another 23 per cent on email. While Google sites have the most unique visitors,
Net users spend the most time on Facebook, which is at second place as far as
unique visitors are concerned. Yahoo, Microsoft and Wikimedia sites follow in
unique visitor numbers. Among social media sites, Linkedin and Twitter are the
next most popular, while Orkut is in decline. Google is by far the most popular
search engine, accounting for 90 per cent of all searches in India. Online retail is
on the rise, with domestic retail sites being the most popular, the report notes, For
online travel websites too, domestic websites are the most popular, the Indian
Railways website being by far the most popular destination.
SLOW MOVEMENT OF ECOMMERCE COMPANIES IN

INDIA
Over the last few years India has experienced a spurt in technology advancement
with the advent of broadband and 3G penetration as well as smart devices.
Convenience of online shopping in view of busy lifestyles, long queues, urban
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traffic congestion and availability of a wider range of products (incl. international

labels) delivered to your door-step (incl. COD) at lower prices compared to brick
and mortar retailers attributes to augmenting e-Commerce adoption. On the
contrary, following are few aspects which may be slowing the adoption of eCommerce in India;
Trust & Quality

Consumers when shopping for tangible products have several queries encircling
the product quality and often would like to obtain a first-hand feel of the product
(such as the fabric quality, fit, or screen display quality, etc.).Many e-Commerce
companies have tried plugging the holes by making available large sized product
images (incl. various perspectives), size guides, however, cautious buyers may still
prefer interacting with the product in real-time before an online purchase; not sure
if their behavior would change with time.
Advent of cash-on-delivery (introduced by Pizza shops) has helped mimic the

shop-floor check-out experience and provides immediate gratification for monies
spent; this seems to be working well and has taken the business of e-Commerce to
greater heights. Many e-commerce firms, including Flipkart, Rediff, Infibeam,
Yatra, Cleartrip and Makemytrip, offer cash-on-delivery options. Flipkarts COO
and co-founder BinnyBansal says cash-on-delivery drives over half its sales. Most
players have reported a figure between 40% and 60%.
China has had COD [cash-ondelivery] for the last 10 years, and even today
a big chunk of e-commerce there happens through cash. I think that will be the
case in India too, Abhishek Nayak, CEO of Gharpay
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Negotiation vs. Price Discounts

Every shopper would like to strike the best deal for their buy; am sure you will
agree that Indians have a keen sense of bargaining for price and would walk/drive
any distance for a better price. With online competition brewing you would find
shoppers wedged amid the huge pricing battlefield and bounce from one store to
another for discovering the best-buy. Have you ever experienced walking into a
store (e.g. electronic, stationery) and striking a deal with the shop-floor manager
over-and-above the tagged price? Try negotiating in comparison to an
online/neighboring store deal and you may be pleasantly surprised. Price could be
the prime influencer for decision making however the satisfaction of winning a
negotiation could be another strong driver for purchase.
ReturnPolicy
Several brick and mortar stores in India provide the flexibility of returning goods
within a stipulated time period once bought; in doing so gain customer confidence
and trust. Online stores have yet not matured to the level of offering favourable
return policies and often shoppers are forced to accept delivered products. One
major advantage that UK online shoppers have over real world buyers is a statutory
cooling-off period of seven days. You can cancel an online transaction and
receive a refund anytime in the first seven working days for any reasonor no
reason. Jabong.com is one of the few India-based commerce companies which
offers a 30-day free return policy (full order as well as part if ordered for multiple
products) which has significantly contributed to their sales volume. Hopefully
many more will soon get added to the list of options.
Broadband Penetration
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The total number of broadband subscribers including DSL, cable, fiber optic, and
broadband wireless platforms is estimated to reach around 15.3 million at the end
of 2012. The penetration is currently low however growing at a rapid pace.
Glancing at a blank computer screen waiting for products to refresh/display owing
to spikes in connectivity speeds and the fear of a transaction being interrupted
during check-out due to technical snags are inherent problems which are yet to be
fine-tuned.
Shopping online has become a mainstream activity for the rural people. People
are evaluating the option of ecommerce and as the Internet penetrates deeper,
more and more people will try it, eBay India Director (Category Management),
KashyapVadapalli
Credit Card Penetration
Unlike in the Western countries, in India cash is used for most transactions. Poor
fraud protection policies and the fear of personal information leaking as well as
spamming further contributes towards the low adoption and usage of credit cards
in India. However, credit card usage is gradually increasing in the premium card
segment.
The country saw a 2 percentage point drop in the number of credit card-holders
last year, - HSBC India consumer assets head Manish Sinha
Several advertising campaigns are being launched by eCommerce companies to
reduce online shopping apprehensions of a consumer. Im sure you must have
seen/heard about the new television campaign, titled No Kidding, No Worries, by
the e-commerce portal Flipkart, responds to an online shoppers worry in a
humorous and quirky way. Few companies are using celebrities as
curators/advocates for products and in that way hoping to inspire trust in
consumers. The eCommerce scenario in India is fast growing with numerous
players and the evolution of product interfaces/platforms and customer experiences
have been significant over the last few years. However, in India online buying is
buzzing amongst the younger generation from select urban areas and in general is
still perceived as being complicated and bumpy.
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CHALLENGES FACED BY ECOMMERCE COMPANIES

Security
Security continues to be a problem for online businesses. Customers have to feel
confident about the integrity of the payment process before they commit to the
purchase.
System and Data Integrity

Data protection and the integrity of the system that handles the data are serious
concerns. Computer viruses are rampant, with new viruses discovered every day.
Viruses cause unnecessary delays, file backups, storage problems, and other similar
difficulties. The danger of hackers accessing files and corrupting accounts adds
more stress to an already complex operation.
System Scalability
A business develops an interactive interface with customers via a website. After a
while, statistical analysis determines whether visitors to the site are onetime or
recurring customers. If the company expects 2 million customers and 6 million
show up, website performance is bound to experience degradation, slowdown, and
eventually loss of customers. To stop this problem from happening, a website must
be scalable, or upgradable on a regular basis.
Ecommerce is Not Free

So far, success stories in ecommerce have forced large business with deep pockets
and good funding. According to a report, small retailers that go headtohead with
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ecommerce giants are fighting losing battle. As in the brickandmortar

environment, they simply cannot compete on price or product offering. Brand
loyalty is related to this issue, which is supposed to be less important for online
firms. Brands are expected to lower search costs, build trust, and communicate
quality. A search engine can come up with the best music deals, for example, yet
consumers continue to flock to trusted entities such as HMV.
Consumer Search is Not Efficient or CostEffective

On the surface, the electronic marketplace seems to be a perfect market, where
worldwide sellers and buyers share and trade without intermediaries. However, a
closer look indicates that new types of intermediaries are essential to ecommerce.
They include electronic malls that guarantee legitimacy of transactions. All these
intermediaries add to transaction costs.
Products People Won't Buy Online

Imagine a website called furniture.com or living.com, where venture capitalists are
investing millions in selling home furnishings online. In the case of a sofa, you
would want to sit on it, feel the texture of the fabric etc. Beside the sofa test, online
furniture sotres face costly returns which makes the product harder to sell online.
Corporate Vulnerability
The availability of product details, catalogs, and other information about a business
through its website makes it vulnerable to access by the competition. The idea of
extracting business intelligence from the website is called web framing.
High Risk of Internet StartUp

Many stories unfolded in 1999 about successful executives in established firms
leaving for Internet startups, only to find out that their getrich dream with a
dot.com was just that a dream.
27
ECOMMERCE TREND BOOMING IN INDIA

With the soared and record breaking online sale in the months of October and
November, it is evidently proved that e-commerce will outpace total retail sales in
few years. Growth of e-commerce was low in starting years due to initial
inhibitions, but, it is growing now with extraordinary pace as the confidence of
Indian buyers is increasing slowly. Seeing the current behavior of Indian buyers,
online experts estimated that the trend of e-shopping will become basic
phenomena among buyers in arriving years. The present and future emarketers are keeping their eyes on the Indian market trends and studying the
consumer behavior for creating best and attractive deals potential clients. As per
experts the coming holiday season in December will blur the retail market shine by
online deals and free shipping offers.
In last two years many e-commerce websites have mushroomed online and giving
tough competition to one another with striking deals like free shipping, coupons,
free gifts, easy return policy, and many more. As per AlexaFlipkart, Ebay,
Snapdeal, Jabong , Home Shop 18,Yebhi, Myntra, Naaptol, Tradusin, and
Fashionandyou are the top ten e-commerce websites in India.
While Indian online market future is going to be boom and not bubble, the retailers
are fastening their belts for launching online stores. It is a peak time; early
adopters have already initiated the processes such as website design and
promotion for surviving the competition between website and retail in future. Gear
yourself up for the cutthroat competition in Indian market as e-commerce is slowly
outpacing practical retail stores.
Comparison shopping has been on a growth but is still under-served compared to
global averages. The need to compare and consume in India across other online
categories like travel, shows a similar consumer behavior in retail category. In the
coming months, expect more and more consumers relying on online research of
products for features and prices.Online retail has seen a heavy overlap with social
networking and search due to aggressive marketing and strong inclination towards
social commerce. We expect a larger portion of online retail from social commerce
with India positioning itself as one of the fastest growing social networked user
base and also larger size of social groups.
To conclude, E-Commerce has seen tremendous growth in the last 12 months.
Models like Cash on Delivery and other consumer centric payment options and
28
improved service quality will boost overall sales. It is definitely the most exciting
phase among online retailers and consumers as this learning curve will put India on
the global map as one of the largest e-commerce markets in the coming months.
COMPANY PROFILE
Company Overview of Flipkart Online Services Pvt. Ltd.

Flipkart Online Services Pvt. Ltd. owns and operates an online shopping Website in India. It
provides books, movies, music, games, consoles, gaming accessories, mobiles, mobile
accessories, cameras, camera accessories, computers, computer accessories, network
components, software, peripherals, home and kitchen appliances, TV and video products, and
personal and health care products. Flipkart Online Services Pvt. Ltd. was founded in 2007 and
is based in Bengaluru, India.
No. 447/B, 1st A Cross
12th Main, 4th Block
Opposite BSNL Telephone Exchange
Koramangala
Bengaluru, 560034
India
Founded in 2007
Phone:
91 80 3023 7000
Fax:
91 80 3023 7000
29
Key Executives For Flipkart Online Services Pvt. Ltd.
Mr. Sachin Bansal

Co-Founder and Chief Executive Officer
Mr. Binny Bansal

Co-Founder and Chief Operating Officer
Mr. Sanjay Baweja

Chief Financial Officer
Age: 54
Mr. Sujeet Kumar

President of Operations
Mr. Mukesh Bansal

Marketing Chief, Head of Flipkart Commerce Platform and Director
Compensation as of Fiscal Year 2014.
Flipkart Online Services Pvt. Ltd. Key Developments
Flipkart Appoints Punit Soni as Chief Product Officer

Mar 4 15
Flipkart announced that Punit Soni, a Google product management executive and former vice
president of product management at Motorola, will join Flipkart as chief product officer. Punit will
lead the product definition and innovation charter for Flipkart consumer products, marketplace
and transaction platform. In this role, Punit will be driving product strategy, design and product
marketing functions to build world class user interface and product solutions.
Flipkart Reportedly In Talks To Raise Funds

Feb 16 15
Flipkart Online Services Pvt. Ltd. intends to raise funds. Flipkart is again in talks with investors
to raise at least $500 million. The company is discussing fund-raising with existing as well as
new investors, sources said. It is likely to use the fresh funds for technology to match the scale
of the business and market share. "They have begun searching for funds again, as the
company feels accumulating funds, though not desperately needed at present, is a good
strategy. Talks have just started and it may take a few months to finalize the intricacies," a
source close to the development said, requesting anonymity. Business Standard added that
Flipkart refused to comment on the matter.
30
Flipkart To Reportedly List In Next 18 Months

Jan 29 15
Flipkart Online Services Pvt. Ltd. is preparing to raise at least $5 billion through an initial public
offering (IPO) on the US bourses in the next 18 months. Flipkart Online Services Pvt. has not
officially signed on any banker for the listing process but has stepped up work on the same.
Morgan Stanley (NYSE:MS), The Goldman Sachs Group, Inc. (NYSE:GS), Citigroup Inc.
(NYSE:C) along with Deutsche Bank AG (DB:DBK), are in discussions with Flipkart Online
Services Pvt. Ltd. for the sale mandate, Economic Times reported citing multiple sources
directly involved in the matter. Flipkart Online Services Pvt. Ltd. declined to comment on the
story. The Goldman Sachs Group, Inc., Citigroup Inc. along with Deutsche Bank AG declined
comment, while Morgan Stanley did not respond to queries on this report.
Similar Private Companies By Industry

Company Name
Region
MadeinHealth.com
Asia
White Light Retail Private Limited
Asia
Rooja Fashion Private Limited
Asia
Modgen Fashions Private Limited
Asia
HW Wellness Solutions Private Limited
Asia
Recent Private Companies Transactions

Type
Date
Target
Merger/Acquisition
AdIQuity Technologies Pvt. Ltd.
March 5, 2015
Merger/Acquisition
JiGrahak Mobility Solutions (P) Ltd.
December 16, 2014

Private Placement
November 24, 2014
--
31
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Flipkart went live in 2007 with the objective of making books easily available to anyone who
had internet access. Today, we're present across various categories including movies, music,
games, mobiles, cameras, computers, healthcare and personal products, home appliances and
electronics and still counting! With over 11.5 million book titles, 11 different categories, more
than 2 million registered users and sale of 30000 items a day, we can say with utmost confidence
that we are one of the leading e-commerce players in the country.
Comparative analysis
1. Keep It Simple
When you look at some very well known online retailers and their logo design, you'll notice one
common thread: simplicity. Largely text-based, both of the following brands have taken the name
of their organization and formatted it to be easily read and identified, whether it appears on their
site, in a list of search results or on an affiliate site.
32
This stripped-down format makes them easy to remember and also provides everything the
customer needs to find them on the web since the logo itself doubles for the web address in each
case.
2. Optimize for Mobile
Legibility for mobile shoppers is really important these days. With the growing level of shopping
people are conducting on the go, its important to make sure the text you include in your logo
isnt too small. Always keep an eye on the scalability of your design, ensuring the logo that
appears on your ecommerce site or email receipt is easily read on the miniature screen of a cell
phone or similar web-enabled device.
3. Reveal Your USP Through Images or Tagline

Position yourself by clearly defining the specific aspects of your product or service that are
superior to the competition. If you are the only, the biggest, the oldest or the best, consider
reflecting that distinction through a catchy slogan or quality art that lets your customers know
youre in the lead. Shopify store Cookbook Village does this really well by including "Vintage
and used cookbooks for chefs, collectors and foodies" right in their logo. They have another logo
without the bottom text that scales better on mobile devices and that they use on Facebook and
Twitter.
33
4. Maximize Your Web Pages with a Horizontal Design

When designing your logo, you might consider keeping the design primarily horizontal. By
minimizing the vertical space and stretching graphics and text across the horizontal plane, you
have a larger amount of real estate to showcase your products, preventing shoppers from having
to scroll down when browsing. Shopify store A Book Apart has a beautiful logo (not
surprisingly) that does a great job of using a horizontal design to increase the number of products
above the fold.
5. Use Images Wisely

Its almost impossible not to think about Amazon without the image of their upward-arced arrow
coming to mind. Plus, as you can see in the other online retailers mentioned above, the use of art
is fairly minimal, making it that much more important to select images that are unquestionably
tied to your offering. Shopify store So Worth Loving incorporates a clean and minimalist image
that will stick in a customer's mind. The half diamond, half heart conveys quality and value with
one half and love with the other.
Where to Start
Start by getting inspired. There are a number of resources available on the web that can provide
an endless catalog of art and inspirational ideas for making an ecommerce store logo. Also check
out Shopify's guide on How to Design an Online Store Logo.
This is a guest post: Dylan Mazeika is an online writer with a background in marketing and
small business. He enjoys writing articles and guest posts on the latest business and design
trends, and helping small business owners with free logo design.
34
DEFINITION OF E-COMMERCE (ELECTRONIC COMMERCE OR EC)

E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the
Internet, especially the World Wide Web. In practice, this term and a newer term, e-business, are
often used interchangably. For online retail selling, the term e-tailing is sometimes used.
35
CONCLUSION
E-commerce is still in its formative stage. The business-to-business and intraorganizational segments currently dominate e-commerce. Many major digital
retailers are as yet in the investment and brand-building mode and show no profits;
yet many established retailers realize profits from the new selling channel. Buoyant
growth is apparent throughout.
The technological infrastructure currently imposes several limitations on the
development of a global market-space and on the personal convenience of the
participants. An integrated consumer-oriented transaction space is yet to emerge.
The consumer marketplace is being developed by a large number of
entrepreneurial initiatives, many of them experimenting on the frontiers.
As many new moves are yet to take place and the supply chains are to be
reconfigured, many new firms may be expected to emerge and specialize around
newly redefined core capabilities. The business models of many existing firms will
be threatened. E-commerce will present over time countless opportunities and
challenges to our economies and societies. Expansion of commerce and
technological innovations are two of the levers of economic growth. These forces
are combined in the progress of E-commerce.
The prevailing judgment at this stage of E-commerce development is to allow freemarket forces to assert themselves unhampered by excessive government
regulation. The traditional institutions, such as banks of issue, commercial banks,
universities, established business intermediaries, media and publishing companies,
would find a need to redefine their roles in the new environment. The taxability of
36
products traded globally over the Internet is as yet an open issue. Intellectual
property that can be converted to on-line content may find itself reevaluate in the
global marketplace.
The tension between the transactional efficiency of spot purchasing facilitated by
electronic markets and the need for long-term relationships of trust and
forbearance, enabled by electronic hierarchies, will persist and call for much study.
The geographical limitations that have bound the place of residence to the place of
work, and that have already been eroded by the growth of tele-work, may be
expected to be even less binding. Indeed, the possibilities of the loss of rural space
to the new ex-urbanites are already causing environmental alarms. A number of
countries that had been marginalized by their geographical position take extremely
active interest in E-commerce as the means to move to the center of the virtual
geography. The redistribution work has to be studied from multiple perspectives.
E-commerce has entered a stage of rapid and sustained development. A large
number of business models have been enabled by it. A number of questions have
been posed here. All of these and many others will require further experimentation,
experience, observation, analysis, and research.
37
BIBLIOGRAPHY
http://www.electroniccourts.in
http://www.quora.com/What-are-the-biggest-challenges-facing-eCommerce-sites-in-India
http://www.thehindu.com/sci-tech/technology/internet/india-is-now-worlds-third-largestinternet-user-after-us-china/article5053115.ece
http://www.bestindiansites.com/flipkart-top-ecommerce-company/
http://ptlb.in/ecommerce/
http://www.addictivemedia.co.in/The-rise-of-E-commerce-business-in-India.html
http://claricetechnologies.com/blog/2012/08/e-commerce-growth-in-india-is-slowmovingyesno/
http://www.hindustantimes.com/ecommerce-booming-in-india/
http://www.siliconindia.com/news/business/10-Best-ECommerce-Companies-in-Indianid-143370-cid3.htmlutm_source=clicktrack&utm_medium=hyperlink&utm_campaign=linkinnews
http://yourstory.com/2013/01/5-challenges-that-an-early-stage-e-commerce-startup-facein-the-indian-e-commerce-industry/
http://www.blog.finesseim.com/e-commerce-trend-india/
Various textbooks on the following topics were also referred to: E-commerce (B.Com level)
38

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