A

Research Paper on
An Exploratory Study of Current Challenges /Problems in
Electronic Commerce in India

TO
Allana Institute of Management Sciences
CHECKMATE, NATIONAL CONFERENCE-to be held in Pune on 20th and
21st of February 2015

Submitted by
Prof. Ramanand Chivate
Chetan Dattaji Gayakwad Institute of Management Studies Pune

An Exploratory Study of Current Challenges /Problems in

Electronic Commerce in India

Abstract: -Over last few decades the popularity of e-commerce has

tremendously increased due to its
quick and convenient way of exchanging goods and regional and global
services E-commerce is anything that involves an online transaction. This
can range from ordering online, through online delivery of paid content, to
financial transactions such as movement of money between bank accounts.
The term Electronic commerce has been around for the past few
years and has become the latest buzzword in the Indian business scenario.
Electronic commerce industry in India is growing every day by leaps and
bounds. This paper discusses about Exploratory Study of Current
Challenges in Electronic Commerce in India. The fact that the Indian
electronic commerce based companies are facing a great challenge from
overseas companies like Amazon has also been highlighted. This paper also
throws light on major security challenges in electronic commerce that
threat should be examine and Regulatory bodies and law making entities
involvement and a probable change in laws related to electronic commerce
industry has also been discussed about It. One of the major problems is
that lawmaking is usually a slow and tedious process. Technology,
however, proceeds and evolves at unparalleled speeds. Any legal change to
the current system requires serious attention and consideration by
governments. This paper provides a discussion of the implications of this
research and offers suggestions for further research.
Keywords: - Electronic commerce, challenges, Regulatory bodies, Online
business

Objectives of the research paper:-This

is a research paper which after

briefly presenting the current E-Business situation in India, analyses
the scope, performance and problems of E-Business and there customer
in India. The primary objectives of this paper are
To study the current position of E-commerce and E- business .
To analyse the future of of E-commerce and E- business .
To study the challenges faced by E-Business players and there
consumers while doing online transaction
Introduction

In its simplest form electronic commerce is the buying and

trading of products and services by businesses and consumers
over the Internet. Internet sales are increasing rapidly as buyers
take advantage of lower prices offer by wholesalers retailing
their products. This trend is set to strengthen as web sites
address consumer security and privacy concerns. Since last
decade the popularity of e-commerce is tremendously increased
due to quick and convenient way of exchanging goods and
services both regionally and globally. The use of smartphones
for mobile shopping has become increasingly popular and has
caused revolutionary changes in consumer behaviors.
Consumers can easily find and cheaply purchase products and
services by engaging in mobile shopping or E- commerce.
According to the Korea Internet Promotion Agency (2012),
47% of smartphone users in South Korea engage in mobile
shopping and 35% engage in mobile shopping more than once a
week. In 2012, South Koreans spent an estimated US$ 1 billion
while mobile shopping. ABI Research (February 2010) predicted
that shopping via mobile Web (i.e., m-commerce) will reach
US$119 billion globally in 2015. This figure would amount to
approximately 8% of the total e-commerce market. According to

a study by IDATE (July 2012), m-commerce in Japan and South

Korea has by far the biggest share of e-commerce sales, 17%
equally in 2012, due to the maturity of the mobile Internet in
these two countries. U.S. mobile commerce sales hit $24.66
billion, accounting for 11% of U.S. e-commerce sales in 2012
and they will represent 21% of e-commerce sales in 2015,
eMarketer predicts (Siwicki, 2013). The meteoric growth of
Internet based E-commerce at the turn of the last century is truly
baffling. During the last one decade, this market space has
grown in several directions. In its first generation, it saw the
emergence of portals and search engines. However, in due
course more and more organizations began to cater to the
Business to Customer (B2C) market. In the last two years, there
is significant growth in the Business to Business (B2B) segment.
As several organizations began to operate in the Internet market
space, they innovated unique propositions to create value in the
process.
Rising incomes and a greater variety of goods and services that
can be bought over the internet is making buying online more
attractive and convenient for Consumers all over the country.
These were either not found or difficult to replicate in the
traditional brick and mortar operation. In 1991, the Internet had
less than 3 million users around the world and its application to
e-commerce was non-existent. By 1999, an estimated 250
million users accessed the Internet and approximately one
quarter of them made purchases online from electronic
commerce sites, worth approximately $110 billion. In 2001 over
400 million users was accessing the internet. If the expansion in
e-commerce continues at this rapid pace, as is expected, then in
four to five years from now, e-commerce transactions between
businesses (B2B) and between businesses and consumers (B2C)

will account for about 5 per cent of inter-company transactions

and retail sales respectively. Looking forward, the potential for
e-commerce transactions to gain a sizeable share of consumer
and business purchases appears to be large, although it is
difficult to quantify.

A lot has been said of the threats posed by e-commerce and the risks associated with using
telecommunications infrastructure for business. It would be remiss not to mention that it is the
business models and stock trading decisions that land many in serious financial trouble. As
recent reports about the corrections in the technology sector across the world's stock markets
suggest, certain business models were not as robust as suggested by all of the hype. Several
thousand dotcom businesses
(worth several billion dollars of cumulative investment) went bust, and in general, IT and
telecommunications stocks took a major drubbing. The biggest threat ecommerce presents is
probably the hype onslaught prepared and presented by an armada of 'experts' and marketers,
who understand very little about either the technology or people, or sometimes both.
Mobile shopping has many disadvantages. . LIMITATIONSOF ECOMMERCE: Though India
represents vast unexplored market for ecommerce the current share of ecommerce in India is
marginal restricted to less than 2 percent. According to reasonable estimated it is not going to
exceed even 5 percent in the next two decades because of several limitations of ecommerce

narrated below. Lack of Personal Touch I miss the personal touch and relationship that develops
with a retail store. In comparison, ecommerce is far more sterile.
Credit Card Fraud: Consumers and businesses alike suffer from credit card fraud. so far as to
predict that fraud will lead to the demise of online business. Need for an Internet Access Device:
Ecommerce can only be transacted with the help of an Internet access device such as a computer
or a smartphone. Security Issues: Consumers run the risk of identity fraud and other hazards as
their personal details are captured by ecommerce businesses. Security continues to be a problem
for online businesses. Customers have to feel confident about the integrity of e-dealers and the
payment process before they commit to the purchase. There are risks of hackings and
cybercrimes and risk of phishing attacks and other forms of security fraud too. Time for delivery
of physical products: It is possible to visit a local music store and walk out with a compact disc,
or a bookstore and leave with a book. Ecommerce is often used to buy goods that are not
available locally from businesses all over the world, meaning that physical goods need to be
delivered, which takes time and costs money. In some cases there are ways around this, for
example, with electronic files of the music or books being accessed across the Internet, but then
these are not physical goods. SYSTEM AND DATA INTRIGRITY: 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
shows 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. examine the vulnerabilities leading to threats and risks. Threats are
risks that can be derived both internally and externally thereby causing a concern to the
smooth flow of the business

Defining and measuring e-commerce:- The term e-commerce has no widely

accepted definition. In a loose sense it means doing business over the Internet, selling goods and services
which are delivered offline as well as products which can be digitised and delivered online, such as
computer software.5 Trades can be among businesses or between businesses and consumers. But the
Internet also encompasses a wider spectrum of potential
commercial activities and information exchanges. For instance, it offers firms, individuals and
governments an electronic infrastructure which enables the creation of virtual auction markets for goods
and services where previously they did not exist. EBay.com, for example, was among the first successful
sites to provide a framework where consumers can trade a wide diversity of goods and services with each
other (consumer to consumer, C2C) and, at least in principle, with businesses (consumer to business,
C2B). Likewise, in some countries, including Australia, the United Kingdom and the United States,
governments are beginning to reorganise the management of public procurement systems -- equivalent to
some 10 per

cent of GDP -- over the Internet, opening the prospect of sizeable B2G transactions. The technology is
also being used by governments for the transmission or receipt of information (G2B, G2C) to improve the
convenience and lower the cost of payment systems and tax compliance (C2G), and by businesses to
manage after sales service and to develop direct consumer marketing. This paper, however, focuses
mostly on two parts of the e-economy: B2B and B2C, where most development and progress to date has
taken place and which is in this paper, collectively referred to as e-commerce

The most useful mobile shopping applications collect product data from several retailers. They
sort collected data to allow consumers to perform side-by-side comparisons of different
merchants prices so they can find the best deals (Johnson, 2011). Mobile shopping performed
with these apps is considered convenient because mobile notifications automatically deliver
promotion information. Another benefit is derived from a price-comparison app that employs bar
code or QR (Quick Response) code scanning to help consumers during in-store shopping.
Immediate gratification is another benefit provided for mobile shoppers because digital products
can be delivered wirelessly to their phones..
Consumer welfare, often measured by surplus, increases when there is expansion in product
variety (Cachon, Terwiesch, & Xu, 2008) or reduction in the costs of buying (Ratchford, 1982).
Brynjolfsson, Hu, & Smith (2003) present how increased product variety through electronic
markets enhances consumer surplus and welfare. Increased consumer intelligence combined with
product varieties of online shopping improves consumer welfare (Kulviwat, Cuo, & Engchanil,
2004). While considering the advantages of mobile shopping apps, they are faster to use and
simpler than websites. Thus, we believe that consumers will feel more self-efficacy and have
welfare gains through mobile shopping.
On the other hand, in all likelihood, mobile shopping will increase impulse buying. According to Rackspace Hosting
(2012), 17% of surveyed UK consumers who owned smartphones and/or tablets stated that ownership of mobile
devices had increased their impulse purchasing. Of these surveyed consumers, 71% suggested that the primary
reason for increased spending was the simplicity of the purchase process and the ease of technology use. Mobile
shoppings quick responsiveness and convenience cause consumers to be more impulsive (Schwartz, 2012).

Impulse buying can also lead to buyers regret after shopping (Dittmar & Drury, 2000; Tom,
2006), which can lead to decreased consumer welfare. Thus, it is apparent that mobile shopping
can cause the negative results of impulse buying and buyers regret.
Nectar bolsters security as police investigate eBay points fraud, Nectar, used by over 19 million
people, has beefed up security after members reported fraudulent transactions on accounts that
had been linked to online auction website eBay.
Ref. The Hindu Feb 8, 2015E-fraud again, 4 Nigerians arrested
Many studies on mobile shopping have primarily focused on the adoption of mobile commerce
or post-purchase experiences .However, only a limited amount of research has examined the
positive and negative results of the mobile shopping environment.
Case :- Through impulse buying (REF:- Times of India Dec 12, 2014) Man orders iPhones, Snap
deal delivers pieces of wood. Darshan Kabra, a resident of Aundh, Pune, had ordered
twoiPhone 4S units from the online marketplace on December 7. Fortunately for Kabra, he had
chosen the Cash on Delivery option while ordering the two iPhones, which are collectively
worth Rs 40,508.
The case is similar to another recent instance where Snap deal reportedly sent bar of Vim
soap and a brick to a person who had ordered a Samsung Galaxy Core Duos smartphone.

RESEARCH METHODOLOGY
In order to attain the objectives of the study, the data was collected from
both the secondary sources. The secondary data was collected from Journals,
internet resources, magazines, books etc.

The present study is conceptual survey with exploratory cum descriptive in nature. It is
based on the analysis of secondary data. The secondary data is availed from various
journals, internet, and books.

CONCLUSION: E-commerce is an emerging trend in Indian economy

in the post economic reforms era. The revolution in the IT sector in the
recent past has been instrumental in development of e-commerce. Ecommerce offers many benefits as well as challenges and problem to the
various stakeholders. These challenges are headache and give the
frustration to the online customer as well e- commerce business man
because any of the security or other issue is not only for customer , it is
for business man also if we want to make better , beneficial,
effectiveness, of e-commerce , we have to tackle the above given

challenges. At present there are several stumbling blocks in the

development of e-commerce such as computer initial investment,
technological issues, computer ill-literacy, legal hassles, and adverse
mindset of consumers, privacy and security issues. However, these
barriers to e-commerce shall be taken care of in due course and hence ecommerce has bright prospects in India. We need to update ourselves to
greet e-commerce and reap its benefits.
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