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ResearchRepor
t
On
Impacts of
Demonetization on
e-commerce
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Chitkara University
(Punjab)

Submitted By: -
Submitted To: -
Gaganjot Singh Baljinder
kaur
1520991233
Lovepreet Singh
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1520991257
B.com 4X

ACKNOWLEDGEMENT
we would like to express our special thanks of gratitude to my teacher (Baljinder kaur
maam) who gave the golden opportunity to do this wonderful project on the topic
(Demonetization), which also helpedin doing a lot of Research and we came to know about
so many new things. We are really thankful to them.
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Contents
1. Introduction
2. Reasons
3. About e-commerce
4. Impacts of demonetization on e-

commerce industry
5. Launched & Promoted new e-

payments systems
6. Objectives
7. Conclusion
8. References

Introduction
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Demonetization refers to Withdrawal of a specific type of money from circulation.

Demonetization is necessary whenever there is a change of national currency. The old unit of
money must be removed and replace with another money unit. The currency was
demonetized first time in 1946 and second time in 1978. On 8Nov. 2016, the currency is
demonetized third time by the present Modi government. This is the strong step taken by
the govt. for the improvement of the economy and country. In this report, we want to
discuss the major impacts of recent demonetization on the Indian businesssystem.On 8 nov
2016 Modi announced that use of all 500 and 1000 banknotes of the mahatma Gandhi
series would be invalid past midnight, and announced the publish of new 500
and 2000 banknotes of the mahatma Gandhi new series in exchange for the old
banknotes.On those days, the country faced extreme cash shortage with severe bad effects
across the economy.People seeking to exchange their bank notes had to stand in lengthy
lines, and many people were deaddue to the rush to exchange money.Public faced lots of
difficulties during demonetization. Educated people used electronic payments but it is
difficult for uneducated people because they have not knowledge about the electronic
payments. Many poor people have not a bank accounts. The demand of 100, 50 & 10
rupees currency is increased. Public buy necessary goods on credit. During this period credit
sales also increased. Its also pushing people to use credit/debit cards. Overall, the usage of
debit cards has gone upto 70% per cent and of credit cards, by 40% per cent, suggesting a
sharp jump in first-time users.

Reasons
The main objective of the demonetization is to disclose the black money in India& make the
economy stronger andeliminate the parallel cash economy which is uncalculated and
untaxed. While this can affect the GDP negatively in the short term, it should have positive
long term consequences. For e-commerce companies which already have a digital payments
system in place, it should lead to higher online payment and finally eliminate the painful
cash on delivery option.

To expose the black money in the economy.

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To minimize the cash flow in the country which is directly related to corruption in our
country.
To eliminate fake currency and dishonesty & unreliable funds which have been used
by terror groups to fund terrorism in India.
Number of income tax payers will increase.
To identified the persons who generated the black money.

97% of the transactions in India were effected in cash, i.e. were not getting routed
through any bank. Huge cash hoarding shrinks bank deposits and lending capacity
of the commercial banks which leads to higher interest rates.
Since 2009, the currency to GDP ratio in India had gradually increased from 1 : 9 to
1 : 12 which is not a good sign for long term health of the economy. By demonetizing
85% value currency notes government got an opportunity to correct it.

A few businesses like land dealers, real estate dealers, promoters and builders,
goldsmith, jwellers, foreign currency dealers, private money lenders generally hold
large amounts of unaccounted money in form of currency notes. Such money had
created a parallel economy in India. Such money has become void or have reached
bank accounts through direct or indirect channels.

About e-commerce

India's e-commerce market was price concerning $3.9 billion in 2009, it went up to $12.6 billion in

2013. The e-retail section was price US$2.3 billion, concerning seventieth of India's e-commerce

market is travel connected. per Google India, there have been 35 million internet buyers in India in

2014 Q1 and is predicted to cross a hundred million mark by finish of year 2016. CAGR vis--vis a

worldwide rate of growth of 810%. natural philosophy and attire area unit the largest classes in terms

of sales. per a study conducted by the IMAI the e-commerce sector is calculable to succeed in Rs.

211,005 large integer by December 2016. The study conjointlyexpressed that on-line travel accounts

for 61 of the e-commerce market. By 2020, India is predicted to get $100 billion on-line retail revenue

out of that $35 billion are going to be through fashion e-commerce. on-line attire sales area unit set to
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grow fourfold in returning years.

India's retail market is calculable at $470 billion in 2011 and is predicted to grow to $675 by 2016 and

$850 billion by 2020, calculable CAGR of 100 percent. per Forrester, the e-commerce market

in India is about to grow the quickest among the Asia-Pacific Region at a CAGR of over 67 between

201216. As per "India Goes Digital", a report by Avenues Capital, the Indian e-commerce market

is calculable at Rs 28,500 large integer ($6.3 billion) for the year 2011. on-line travel constitutes a

large portion (87%) of this market these days. on-line travel market in India is predicted to grow at a

rate of twenty-two over subsequent four years and reach Rs 54,800 large integer ($12.2 billion) in size

by two015. Indian e-tailing trade is calculable at Rs three,600 large integer (US$800 million) in 2011

and calculable to grow to Rs 53,000 large integer ($11.8 billion) in 2015.

Impacts of demonetization on e-commerce

industry
Flipkart, Amazon, Snapdeal, Myntra, Yepme& other lots of online shopping sites in india.
These e-commerce sites, however, took an unpredictable spike in their
revenue soon when the implementation of the ban on the higher denomination currency
notes.

Undelivered Orders
Most of the orders that were placed with the cash on delivery option could not be
delivered because the online retailers could not accept old notes. All the overheads and
the costs incurred in shipping the orders go a waste in case of undelivered orders. This is
indeed a significant loss for the e-commerce players.

Remove the COD option

The online retailers remove the cash on delivery(COD) options during demonetization.
They accept only E-Payments.

Decreasing in number of orders

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In indian people prefer the cash on delivery option rather than other options.
As a major chunk of orders placed on the online sites is paid with cash on delivery,
demonetization had aadverse effect on the number of orders placed. People only had to
wait to get their old currencies to be exchanged and few of the customers are distrustful
about online payments.

Short impact on e-commerce partners

This situation is very critical for e-commerce stakeholders. Goods are moving slow,
returned undelivered orders, reduction in the cash flow, decrease in sales, all together
came as a severe blow for the e-commerce partners. But economists, as well as the e-
commerce business sectors, knew that this effect is a temporary one and that the long-
term impact is going to make things better for them.

Add new payment methods

Besides payment through internet banking and debit or credit cards, mobile wallet
payments are great too. E-commerce sites can start adding more options of payments
and payment through popular mobile wallets, Paytm, BHIM, etc.

Lucrative Discount options

many retailers also started attractive promotions and discounts offers to pushthe people
to place orders.

Cashless payments
Online retailers also have introduced impressive discounts for all the cashless payments.
This encourages more customers to choose a payment method other than COD and claim
their discounts and in turn helping the e-commerce businesses retain a reasonable cash
flow.
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Launched & Promotednew E-payments

systems
Their one thing is going right way after demonetization that is online payments. There has
been a rise in the number of debit and credit card transactions. Even smaller vendors have
introduced cashless payment methods. Govt. of india take initiative to introduce new digital
payments methods.

There has been a significant growth in the mobile wallet sector. Transferring money as well
as making payments for online orders is easy with mobile wallets. More people have begun
to fill up their mobile wallets resulting in the growth of the mobile wallet providers like
Paytm, Mobikwik and more.

Unified Payments Interface (UPI) will see a steady growth. The support of the government
has also been in favor of promoting UPI for online payments.

The first main benefit is the freedom to choose an EMI option for your bigger purchases. If
you purchase a smartphone or laptop on EMI, your short-term financial strain would be less.
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Banks like ICICI have introduced debit card EMI option for mobile and other purchases. This
can also benefit customers making online purchases without a credit card. imagine being to
purchase all high-end smartphones and laptop on EMI even without owning a credit card!You
could choose to purchase all the gadgets, furniture and appliances you have always
hesitated to purchase due to your financial constraint through online loans and pay easily
with your debit card. These micro-loans are paid through your debit cards and thus make it
easy for you to purchase any gadget say like iPhone 5S on EMI without a credit card from
any of your favorite online retailer.

Online payments are quick, hassle free and time saving. And EMIs are the best part about
online payments. This avoids causing a financial strain when you make a large value
purchase. Know how easy it is to get instant loans for all your appliance, furniture and
gadget purchases. So, do not let the ban on currency notes of higher denominations stop
you from buying all that you wanted.

Paytm, Free charge, Mobikwik Graphs

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ATM graph

Objective of the study

To know the situation of e-commerce during demonetization in India.
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How the demonetization help the e-commerce in future.

Conclusion
E-commerce is not a new industry, technically speaking, but it is creating a new economic
model. Most people agree that e-commerce will positively impact economic society in the
future, but in its early stages its impacts are difficult to gauge. Some have noted that e-
commerce is a sort of incorporeal revolution. E-commerce has numerous social benefits:
one, the cost of running an e-commerce business is very low when compared with running a
physical store; two, there is no rent to pay on expensive premises; and three, business
processes are simplified and less man-hours are required to run a typical business smoothly.
In the area of law, education, culture and also policy, e-commerce will continue to rise in
impact. E-commerce will truly take human beings into the information society.
Demonetization will help the e-commerce industry and insist or encourage the people to use
more cash less transactions in day to day life, so that the people need not carry the money
in currency form for any purchases like Hair oil to shoe from Head to legs of human needs.
This will helps the banking sector to expand the business to rural areas quickly and do the
more business to reach the general public for their regular activities. Lower inflation, lower
interest rates and lower budget deficits are likely to be the long term positive
macroeconomic effects of the move, which should stimulate economic growth and benefit
businesses in the region. However, as the country undergoes this huge transformation from
a cash dominant economy to a near cashless economy. This move will definitely bring about
a sea of change in the way transactions are done in India. And help strengthen the economy
by wiping out black money and fake notes. While e-commerce companies that see a huge
chunk of payments happening through Cash on Delivery mode will face some challenges in
the initial few days, in the long run this move will only bring about positive changes.

References
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This paper is fully done by secondary data, collected from sources like websites and
newspapers. The main purpose of this is to give a brief of Demonetization and its effects on
e-commerce.
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