UNIT -5

Arti Pandey
Asst.Professor
 UNIT 5
• Applications of E-Commerce: Introduction, History of
Electronic Commerce, Advantages and Disadvantage
of E-commerce, Roadmap of e-commerce in India.
• E-business Models Based on the Relationship of
Transaction Parties, e-commerce Sales Life Cycle
(ESLC) Model.
• Electronic Payment Systems, Electronic Cash, Smart
Cards and Electronic Payment Systems, Credit Card
• Based Electronic Payment Systems, Risks and
Electronic Payment Systems, Electronic Data
Interchange (EDI)
E -commerce
 What Is Ecommerce?

• Ecommerce (electronic commerce) refers to all online activity that

involves the buying and selling of products and services. In other
words, ecommerce is a process for conducting transactions online.

• When you go to your favorite online retailer to buy a new pair of

shoes, you’re engaging in ecommerce. If you pay online to attend a
music concert or buy a plane ticket through the airline’s website,
that’s ecommerce, too.
Ecommerce doesn’t only occur on desktop, though. In fact, most
ecommerce traffic is driven through mobile commerce. Spurred by
the influence of smartphones and the comfort of online shopping,
mobile commerce sales are expected to account for more than half
of all ecommerce sales by 2021.
 Ecommerce on the Rise
• It’s predicted that worldwide ecommerce will reach $5
trillion by 2021 according to eMarketer.
• To stay ahead of the curve, many business owners are
taking their businesses online — not only by having a
website but by selling their products and services
directly through their website and other ecommerce
platforms.
• The latest ecommerce statistics highlight the fact that
online shopping behavior is changing and that customer
preferences are driving ecommerce growth:
• Ecommerce sales are projected to reach 17.5% of retail
sales by 2021.
 Contd…

• Some 21.8% of the world’s population shops online. If you’re not

selling online, you’re missing out on the opportunity to convert a
massive pool of potential buyers.
• According to Forrester, U.S. B2B ecommerce will reach $1.8
trillion by 2023.
• Seventy-three percent of shoppers use multiple channels —
including Google, social media, and email — to do their shopping.
• To maximize sales and provide the tailored experience customers
are looking for, it’s important to stay on top of the latest business
trends. It’s clear that ecommerce is booming internationally, so
now is the time to consider ecommerce as a viable business.
With 95% of all purchases expected to be transacted via
ecommerce by 2040, it’s not too late to ride the ecommerce
wave.
 The benefits
• Convenience. Ecommerce provides the best in
convenience and accessibility. Customers can find exactly
what they need, at any time, directly from their desktop
or mobile device. More convenience for the customer
translates into more business for your company.

• Borderless Transactions. A physical store limits business

operations to a specific geographical area. An
ecommerce website, on the other hand, allows your
business to reach more customers, globally —
maximizing your selling potential.
 Contd…

• Earnings While You Sleep. The internet never

sleeps. With a physical store, you likely
operate during regular business hours. With
ecommerce, your products are available for
purchase at any time to customers around the
world.
 Contd…

• Scalability. As your customer base grows, you can expand

your ecommerce businesses to accommodate more sales.
While expanding your physical store typically means
relocating or renovating (which can be expensive), you’ll
simply need to increase the bandwidth on your ecommerce
platform to accommodate more traffic and orders. And, you
can predict future sales based on past sales data and scale
your platform up or down accordingly.

• Personalized Experiences. With ecommerce, you can leverage

the power of AI to create a personalized shopping experience
for your customers. With AI-enabled up-selling and cross-
selling, you present customers with products they’re most
likely to be interested in, increasing your business’s sales.
 Contd…

• Access to Innovative Technology. As technology continues to

improve, you’ll find more ways to streamline your business
processes — saving you time and money. With a physical store,
there can be limitations to what technology can do. With
ecommerce, you’ll find a range of apps and integrations that
help you market your products, improve team collaboration, and
provide faster customer service.

• Affordable and Effective Marketing. Rather than rely on

traditional marketing methods like print ads to drive traffic to a
physical store, you’ll have a range of affordable marketing
channels to drive customers to your ecommerce business.
Search engine marketing, organic and paid social media ads, and
email marketing allow you to reach a segmented market for a
lower cost.
 In India
• The Covid-19 pandemic has accelerated the shift
towards online shopping all over the world.
Consequently, the ecommerce industry saw a 77%
rise in 2021 compared to the previous year, while
Tier 2 and Tier 3 cities in India transacted more than
ever, according to a Bobble AI (conversational media
platform) report.
 Contd…
• The ecommerce sector in India is currently at a late
growth stage, given the presence of multiple players
and the emergence of new business models such as
direct-to-consumer or D2C, the Thrasio model of
consolidation and growth and the rapid rise of
social commerce. Furthermore, the country is home
to more than 5K active ecommerce startups, which
are pushing the advantages of digital commerce
across the consumer retail segment and driving
growth.
 Roadmap of e-commerce in India,
• E-commerce has transformed the way business is
done in India. The Indian E-commerce market is
expected to grow to US$ 188 billion by 2025 from
US$ 46.2 billion as of 2020. By 2030, it is expected to
reach US$ 350 billion. In 2022, the Indian e-
commerce market is predicted to increase by 21.5%,
reaching US$ 74.8 billion.

• India’s e-commerce market is expected to reach US$

111 billion by 2024 and US$ 200 billion by 2026.
 Contd…
• Much of the growth for the industry has been
triggered by an increase in internet and
smartphone penetration. The number of
internet connections in 2021 increased
significantly to 830 million, driven by the
‘Digital India’ programme. Out of the total
internet connections, ~55% of connections
were in urban areas, of which 97%
connections were wireless.
 MARKET SIZE
• The Indian online grocery market is estimated to reach
US$ 26.93billion in 2027 from US$ 3.95 billion in FY21,
expanding at a CAGR of 33%. India's consumer digital
economy is expected to become a US$ 1 trillion market by
2030, growing from US$ 537.5 billion in 2020, driven by
strong adoption of online services such as e-commerce
and edtech in the country.

• According to Grant Thornton, e-commerce in India is

expected to be worth US$ 188 billion by 2025.
 Contd..
• With a turnover of $50 billion in 2020, India became
the eighth-largest market for e-commerce, trailing
France and a position ahead of Canada.
• Propelled by rising smartphone penetration, launch
of 4G network and increasing consumer wealth, the
Indian E-commerce market is expected to grow to
US$ 200 billion by 2026 from US$ 38.5 billion in
2017.
• After China and the US, India had the third-largest
online shopper base of 140 million in 2020.
 Contd…
• Indian consumers are increasingly adopting 5G smartphones even before roll out
of the next-gen mobile broadband technology in the country. Smartphone
shipments reached 169 million in 2021 with 5G shipments registered a growth of
555% year on year in 2021. Indian consumers are increasingly adopting 5G
smartphones even before roll out of the next-gen mobile broadband technology
in the country. Smartphone shipments reached 150 million units and 5G
smartphone shipments crossed 4 million in 2020, driven by high consumer
demand post-lockdown. According to a report published by IAMAI and Kantar
Research, India internet users are expected to reach 900 million by 2025 from
~622 million internet users in 2020, increasing at a CAGR of 45% until 2025.

• For the 2021 festive season, Indian e-commerce platforms generated sales worth
US$ 9.2 billion Gross Merchandise Value (GMV), a 23% increase from last year’s
US$ 7.4 billion.
 INVESTMENTS
• India’s ecommerce sector received US$ 15 billion of PE/VC
investments in 2021 which is a 5.4 times increase year on year.
This is the highest investment value received by any sector ever in
India.
• In February 2022, Xpressbees became a unicorn with a US$ 1.2
billion valuation after raising US$ 300 million in its Series F
funding.
• In Februrary 2022, Amazon India launched One district One
product (ODOP) bazaar on its platform to support MSMEs.
• In Februrary 2022, Flipkart launched the “sell back program” to
enable trade in smartphones.
• In Janaury 2022, Walmart invites Indian sellers to join its US
market place with an aim of exporting US$ 10 billion from India
each year by 2027.
 Contd…
• In January 2022, Flipkart has announced expansion in its
grocery services and will offer services to 1,800 Indian
cities.
• In November 2021, XPDEL US- based ecommerce
announced expansion in India.
• In September 2021, CARS24, India's leading used car e-
commerce platform, has raised US$ 450 million in
funding, comprising a US$ 340 million Series F equity
round and US$ 110 million in debt from various financial
institutions. In September 2021, Amazon launched Prime
Video Channels in India. Prime Video Channels will give
Prime members a seamless experience and access to a
variety of popular video streaming services.
 Contd…
• In September 2021, Bikayi, a mobile commerce
enabler, raised US$ 10.8 million in a Series A funding
round, led by Sequoia Capital India.
• Flipkart, India's e-commerce powerhouse, announced
in July 2021 that it has raised US$ 3.6 billion in new
funding from various sources including sovereign
funds, private equities and Walmart (parent
company).
• In June 2021, Flipkart added a new fulfilment centre
(FC) in Dankuni, West Bengal. The FC is spread over
2.2 lakh sq. ft. and has a potential to create ~3,500
direct jobs.
 Contd…
• In June 2021, Grofers, the grocery delivery start-up,
reportedly entered the unicorn club, after raising US$
120 million from Zomato, the food delivery platform.
• In June 2021, Mastercard invested an undisclosed
amount in Instamojo, a payments firm, to help digitise
online stores and process their payments more
seamlessly.
• In May 2021, Amazon introduced a video streaming
service within its shopping app called MiniTV for users
in India. MiniTV features web series, comedy shows and
content on tech news, food, beauty and fashion.
 Contd…
• In May 2021, Flipkart strengthened its grocery
infrastructure to cater to customer safety and demand
across India. In this quarter, it is planning to further expand
its fulfilment centre capacity for grocery by over 8 lakh
square feet across Delhi, Kolkata, Chennai, Coimbatore
and Hyderabad..

• In May 2021, Flipkart announced that it is in talks with

sovereign funds, private equity majors and other investors
to raise up to US$ 2 billion at a valuation of US$ 30
billion.
 Contd…
• In April 2021, Flipkart announced a commercial alliance
with Adani Group to improve the company's logistics and
data centre capabilities and create about 2,500 direct jobs.
• In April 2021, Flipkart announced to acquire Cleartrip, an
online travel technology firm. Flipkart announced to
purchase 100% shareholding of Cleartrip as the company
expands its investments to broaden its digital commerce
offerings for customers.
• In April 2021, Kirana commerce platform ElasticRun
raised US$ 75 million in a round led by existing investors
—Avataar Venture Partners and Prosus Ventures.
 Contd…
• In March 2021, Amazon acquired Bengaluru-based retail tech
start-up Perpule for Rs. 107.6 crore (US$ 14.5 million).
• In March 2021, Purplle, an online beauty store, raised US$ 45
million from Sequoia Capital India, Verlinvest, Blume Ventures
and JSW Ventures.
• In March 2021, Captain Fresh, a B2B marketplace for seafood,
raised US$ 3 million in seed capital led by Matrix Partners India
and Ankur Capital.
• In March 2021, the Confederation of All India Traders (CAIT),
which represents 80 million traders and 40,000 trader
associations, announced the launch of a mobile app for its e-
commerce portal, ‘Bharat E-market’. The association aims to get
more small traders to sell online easily through smartphones.
 GOVERNMENT INITIATIVES

Since 2014, the Government of India has announced various

initiatives, namely Digital India, Make in India, Start-up India,
Skill India and Innovation Fund. The timely and effective
implementation of such programs will likely support growth of E-
commerce in the country. Some of the major initiatives taken by
the Government to promote E-commerce in India are as follows:
• As of February 15, 2022, the Government e-Marketplace (GeM)
portal served 9.04 million orders worth Rs. 193,265 crore (US$
25.65 billion) to 58,058 buyers from 3.79 million registered
sellers and service providers.
• As of November 2, 2021, the Government e-Marketplace (GeM)
portal served 7.96 million orders worth Rs. 152,315 crore (US$
20.40 billion) to 55,433 buyers from 3.06 million registered
sellers and service providers.
• As of October 11, 2021, the Government e-Marketplace (GeM) portal served 7.78
million orders worth Rs. 145,583 crore (US$ 19.29 billion) to 54,962 buyers from 2.92
million registered sellers and service providers.

• In a bid to systematise the onboarding process of retailers on e-commerce platforms,

the Department for Promotion of Industry and Internal Trade (DPIIT) is reportedly
planning to utilise the Open Network for Digital Commerce (ONDC) to set protocols
for cataloguing, vendor discovery and price discovery. The department aims to
provide equal opportunities to all marketplace players to make optimum use of the e-
commerce ecosystem in the larger interest of the country and its citizen.

• National Retail Policy: The government had identified five areas in its proposed
national retail policy—ease of doing business, rationalisation of the licence process,
digitisation of retail, focus on reforms and an open network for digital commerce—
stating that offline retail and e-commerce need to be administered in an integral
manner.

• The Consumer Protection (e-commerce) Rules 2020 notified by the Consumer Affairs
Ministry in July directed e-commerce companies to display the country of origin
alongside the product listings. In addition, the companies will also have to reveal
parameters that go behind determining product listings on their platforms.
• Government e-Marketplace (GeM) signed a Memorandum of Understanding (MoU) with
Union Bank of India to facilitate a cashless, paperless and transparent payment system for
an array of services in October 2019.

• Under the Digital India movement, Government launched various initiatives like Umang,
Start-up India Portal, Bharat Interface for Money (BHIM) etc. to boost digitisation.

• In October 2020, Minister of Commerce and Industry, Mr. Piyush Goyal invited start-ups to
register at public procurement portal, GeM, and offer goods and services to government
organisations and PSUs.

• In October 2020, amending the equalisation levy rules of 2016, the government mandated
foreign companies operating e-commerce platforms in India to have permanent account
numbers (PAN). It imposed a 2% tax in the FY21 budget on the sale of goods or delivery of
services through a non-resident ecommerce operator.

• In order to increase the participation of foreign players in E-commerce, Indian Government

hiked the limit of FDI in E-commerce marketplace model to up to 100% (in B2B models).

• Heavy investment made by the Government in rolling out fiber network for 5G will help
boost E-commerce in India.
 ROAD AHEAD
• The E-commerce industry has been directly impacting micro, small & medium enterprises
(MSME) in India by providing means of financing, technology and training and has a
favourable cascading effect on other industries as well. Indian E-commerce industry has
been on an upward growth trajectory and is expected to surpass the US to become the
second largest E-commerce market in the world by 2034. Technology enabled innovations
like digital payments, hyper-local logistics, analytics driven customer engagement and
digital advertisements will likely support the growth in the sector. The growth in E-
commerce sector will also boost employment, increase revenues from export, increase tax
collection by exchequers, and provide better products and services to customers in the
long-term. Rise in smartphone usage is expected to rise 84% to reach 859 million by 2022.

• E-retail market is expected to continue its strong growth - it registered a CAGR of over 35%
to reach Rs. 1.8 trillion (US$ 25.75 billion) in FY20. Over the next five years, the Indian e-
retail industry is projected to exceed ~300-350 million shoppers, propelling the online
Gross Merchandise Value (GMV) to US$ 100-120 billion by 2025.

• According to Bain & Company report, India’s social commerce gross merchandise value
(GMV) stood at ~US$ 2 billion in 2020. By 2025, it is expected to reach US$ 20 billion, with
a potentially monumental jump to US$ 70 billion by 2030, owing to high mobile usage.
 The Types

• Business-to-Business (B2B)
• Business-to-Consumer (B2C)
• Consumer-to-Consumer (C2C)
• Consumer-to-Business (C2B)
• Business-to-Administration (B2A)
• Consumer-to-Administration (C2A)
 Business-to-Business (B2B)

• A B2B model of business involves the conduct

of trade between two or more
businesses/companies. The channels of such
trade generally include conventional
wholesalers and producers who are dealing
with retailers.
 Business-to-Consumer (B2C)
• Business-to-Consumer model of business deals with the retail
aspects of e-commerce, i.e. the sale of goods and/or services to
the end consumer through digital means. The facility, which has
taken the business world by storm, enables the consumer to have
a detailed look at their proposed procurements before placing an
order. After the placement of such orders, the company/agent
receiving the order will then deliver the same to the consumer in
a convenient time-span. Some of the businesses operating in this
channel include well-known players like Amazon, Flipkart, etc.

• This mode of purchase has proved to be beneficial to the

consumers when compared to the traditional method, as they are
endowed with access to helpful contents which may guide their
purchases appropriately.
 Consumer-to-Consumer (C2C)

• This business model is leveraged by a

consumer for selling used goods and/or
services to other consumers through the
digital medium. The transactions here are
pursued through a platform provided by a
third party, the likes of which include OLX,
Quickr, etc.
 Consumer-to-Business (C2B)

• A C2B model is the exact reversal of a B2C model.

While the latter is serviced to the consumer by a
business, the C2B model provides the end
consumers with an opportunity to sell their
products/services to companies. The method is
popular in crowdsourcing based projects, the
nature of which typically includes logo designing,
sale of royalty-free photographs/media/design
elements, and so on and so forth
 Business-to-Administration (B2A)

• This model enables online dealings between

companies and public administration, i.e. the
Government by enabling the exchange of
information through central websites. It
provides businesses with a platform to bid on
government opportunities such as auctions,
tenders, application submission, etc. The scope
of this model is now enhanced, thanks to the
investments made towards e-government.
 Consumer-to-Administration (C2A)
The C2A platform is meant for consumers, who may
use it for requesting information or posting feedbacks
concerning public sectors directly to the government
authorities/administration. Its areas of applicability
include:
• The dissemination of information.
• Distance learning.
• Remittance of statutory payments.
• Filing of tax returns.
• Seeking appointments, information about illnesses,
payment of health services, etc.
 e-commerce Sales Life Cycle (ESLC) Model
• As an ecommerce agency that has developed successful
strategies for numerous well-known brands, Space 48 and
its design, engineering and growth marketing teams have
been through countless business growth journeys. Although
there’s no one-size-fits-all formula for lasting success in
retail, as every brand’s requirements and circumstances are
unique, there are typical patterns and stages that online
businesses go through which form an ecommerce lifecycle.
• Space 48 founder Jon Woodall discusses his ecommerce
lifecycle model, which he created to assess the stages that
most ecommerce businesses go through and reveals how to
maintain lasting growth with strategic solutions:
Three stages of the ecommerce business
lifecycle

• Stage 1 – Start-up & fast growth

• Stage 2 – Plateauing growth or consolidation

• Stage 3 – Renewed growth by implementing

change (new platforms, features,
resources/people or strategies)
 Stage 1: Start-up & fast growth

• Most ecommerce businesses go through an initial period of fast

and in some cases unexpected growth. This is usually to do with
the popularity of the product they sell or market demand rather
than the implementation of their ecommerce platforms. Many
businesses will choose platforms such as BigCommerce, Shopify
or Magento. It’s important that your business stays agile and
responds quickly to change.
• You don’t want to get caught up in complicated systems or
handcuffed by too much process. Brands often enjoy quick
impact in this honeymoon period, before growth slows down and
progression is halted by a kind of invisible ceiling. This sees
businesses moving into the second stage of the ecommerce
lifecycle, which is a growth plateau.
 Stage 2: Plateauing growth or consolidation
• I’ve found that many businesses reaching this second
stage of the ecommerce lifecycle tend to panic and look
for quick-fix solutions to perceived issues. You need to
understand that it’s natural for there to be a levelling off
of growth after the early spike. Once your business has
gained traction, brand awareness and initial momentum,
it’s time to reflect on your progress, analyse your data
and gain key insights to make measured and strategic
changes to your ecommerce website and your marketing.
• It’s important for business owners to assign ample time
and resources to research, to systemise and strategise to
work out the best ways to move to the next level and
start achieving renewed growth.
 Stage 3: Renewed growth
• As I mentioned, many business owners think that the
solution to the issue of plateauing growth is a quick fix
or a swift change of direction, which can be an
ecommerce platform move or, perhaps, the
recruitment of a new ecommerce manager.
• This is not necessarily thinking strategically.
A replatforming project might indeed be the answer –
perhaps to a more advanced or modern ecommerce
platform, like Big Commerce – but you need to make a
clear business case (including extensive research and
risk assessments) before deciding to migrate platforms.
Check out Space 48’s golden rules of replatforming
blog to learn more.
• In this third stage of the ecommerce lifecycle, the
attempts to reinvigorate your company’s
momentum and growth should always be strategic.
In my experience, the solution to plateauing growth
may only require realigning your business goals
• with changing customer trends, keeping up-to-date
with new technology and channel strategies.
• Research and analysis is required to optimise
processes and improve customer experience. This
will steer your strategy. Research may reveal issues
and you might find you need to replatform, but
there needs to be sound reasoning behind decisions
to implement technology and tools.