E-commerce in Rural areas

Auro university
Que. E-commerce played a vital role in changing the contours of marketing. Various
company have started using this mode to enter into different segment. Do you feel rural
markets can be tapped through this mode. You are require to do an expensive secondary
research and submit your findings by concluding whatever or not E-commerce will be
successful in rural set up.

EXECUTIVE SUMMARY
Substantial changes to businesses as a result of e-commerce technologies have been widely
predicted. The aim of this study was to assess the current state of play regarding the impact of ecommerce on inland, non-farm businesses in rural regions. These businesses merit special
attention because they are already adapting to a range of other challenges such as changes to
competition and tax regimes, continuing structural change in agriculture and, especially in Indian
rural areas providing more opportunities for rural people through e commerce. This paper
includes changing scenario of e-commerce, some challenges, advantages etc.. One will get extra
information related to e-commerce through this paper.

INTRODUCTION ABOUT E-COMMERCE

Even today, some considerable time after the so called dot com/Internet revolution, electronic
commerce (e-commerce) remains a relatively new, emerging and constantly changing area of
business management and information technology. There has been and continues to be much
publicity and discussion about e-commerce. Library catalogues and shelves are filled with books
and articles on the subject. However, there remains a sense of confusion, suspicion and
misunderstanding surrounding the area, which has been exacerbated by the different contexts in
which electronic commerce is used, coupled with the myriad related buzzwords and acronyms.
In order to understand electronic commerce it is important to identify the different terms that are
used, and to assess their origin and usage. According to the editor-in-chief of International
Journal of Electronic Commerce, Vladimir Zwass, Electronic commerce is sharing business
information, maintaining business relationships and conducting business transactions by means
of telecommunications networks.1 He maintains that in its purest form, electronic commerce has
existed for over 40 years, originating from the electronic transmission of messages during the
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Berlin airlift in 1948.2 From this, electronic data interchange (EDI) was the next stage of ecommerce development. In the 1960s a cooperative effort between industry groups produced a
first attempt at common electronic data formats. The formats, however, were only for
purchasing, transportation and finance data, and were used primarily for intra-industry
transactions. It was not until the late 1970s that work began for national Electronic Data
Interchange (EDI) standards, which developed well into the early 1990s.
EDI is the electronic transfer of a standardised business transaction between a sender and
receiver computer, over some kind of private network or value added network (VAN). Both sides
would have to have the same application software and the data would be exchanged in an
extremely rigorous format.
With the advent of the Internet, the term e-commerce began to include:
Electronic trading of physical goods and of intangibles such as information.
All the steps involved in trade, such as on-line marketing, ordering payment and support for
delivery.
The electronic provision of services such as after sales support or on-line legal advice.
Electronic support for collaboration between companies such as collaborative on-line design
and engineering or virtual business consultancy teams.

HISTORY
E-commerce is usually referred to combining new technologies with elements of traditional
stores and direct mail models. The term E-commerce was originally conceived to describe the
process of conducting business transactions electronically using technology from Electronic Data
Interchange (EDI) and Electronic Funds transfer (EFT).These technologies, which first appeared
in the late 1970s, allowed for the exchange of information and the execution of electronic
transactions between business typically in the form of electronic purchase orders and invoices.
EDI and EFT were the enabling technologies that laid the groundwork for what we now know as
E-commerce. The definition of E-commerce began to change in 2000 though, the year of the dotcom collapse when thousands of internet business folded. Despite the epic collapse, many of the
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worlds most established traditional brick-and-mortar business were emboldened with the
promise of E-commerce and the prospect of serving a global customer base electronically. The
very next year, business to business transactions online became one of the largest forms of Ecommerce with over $700 billion dollars in sales. Many of the dot-com collapse first-mover
failures served their offline competitors very well, providing evidence of what not to do in
building a viable on line business. For example, Web van, which was one of the more infamous
national supermarket chains, who each have developed their own successful online grocery
delivery business.

CHANGING SCENARIO OF E-COMMERCE IN RURAL AREAS:

Internet Charms Rural India With rising Internet penetration across the country and adoption of
online shopping among the masses, companies selling products and services through websites
are looking at smaller cities in order to expand their business.
According to eBay India Census 2012 report ecommerce is here to stay. The research findings
were based on an analysis of all online buying and selling transactions by Indians on eBay
between July 1, 2011 and December 31, 2012. The marketplace had around 4500 ecommerce
hubs during the time of study, of which over a thousand hubs were located in rural India,
indicating that consumers in the smaller towns of India are a major force in this online growth
story.

CHALLENGES WHILE REACHING THE RURAL AREAS

Ecommerce companies face a number of operational hurdles, especially in rural areasgiven the
poor infrastructure available in those parts of the country. The low literacy rate in the country is
the problem for the growth of ecommerce, as even the educated people in rural areas are not able
to handle cyber technology.
In recent years, rural markets have acquired significance, as the overall growth of the Indian
economy has resulted in the substantial increase in the purchasing power of the rural
communities. In fact estimates show rural markets are growing much faster than urban markets.
But there are a number of factors hindering the growth of ecommerce in the country, biggest of

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which are low Internet penetration, payments and distribution logistics. said Sanjay Panigrahi,
CEO at Sahaj eVillage.

EXAMPLE OF E-COMMERCE IN RURAL AREAS:

1. Ebay:
Ebay, one of the leading e-commerce marketplace in the country, today unveiled the eBay census
that provides insights into the online buying and selling behaviour of the consumers based on the
transactions. The fifth eBay census takes into account the online transactions on the site from
July 1, 2011 to December 31, 2012.
One of the key trends observed this year is what is being termed as massification of ecommerce as online shopping is now truly mainstream and nationwide phenomenon. India
registered a healthy 30 percent rise over last years census when it came to number of cities and
towns engaging in e-commerce. Out of the 4,306 e-commerce hubs, 3,281 are the so called
Bharat hubs (smaller towns) and 1,015 rural hubs, while the rest were the metros.

2. Snapdeal:
Snapdeal will launch around 5,000 e-commerce kiosks across 65 cities and 70,000 rural areas by
the end of next year with the help of FINO PayTech, an Indian financial inclusion solutions
company. These e-commerce centers will be manned by village-level entrepreneurs, have
personal computers and tablets, and also serve as collection and delivery points of packages
since most people living in these areas usually have no permanent addresses. Additionally, they
will help consumers with zero internet connectivity to shop online.

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Snapdeal (in detail)

Snapdeal.com, is Indias leading and fastest growing e-commerce company which focuses on
providing great deals on things to experience and buy. Snapdeal has been rated as the #1
Ecommerce site in India by Dataquest/Sapient E-commerce Survey 2011, is the Red Herring
Asia Top 100 Winner 2011, among other accolades. SnapDeal prides itself in the seamless
experience that it has created for our customers. Snapdeal.com has a network of more than 50000
small and large retailers and brands, and is among the top 20 internet companies in India in terms
of web traffic. The company started in February 2010, has a fast growing, young team of 600
members across 50 cities in India. Leading global investors, Bessemer Venture Partners, Nexus
Venture Partners and IndoUS Venture Partners, have backed Snapdeal with over US $50

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Million. The company is founded by graduates of The Wharton School & School of Engineering
at UPenn (M&T Program), Kellogg School of Management, Indian Institute of Technology,
INSEAD, and has team members with backgrounds from leading global academic institutions
and companies.
Snapdeal, the online marketplace modelled on Chinas Alibaba, is raising stakes in the ecommerce segment. A month after it raised $627 million (Rs 3,762 crore) from Japanese investor
SoftBank, the company is targeting an annual $3 billion (Rs 18,000 crore) in gross merchandise
value (GMV) sales by March 2015.
Company sources told Business Standard the Snapdeal management had set a goal to increase
GMV to $3 billion from $1 billion (Rs 6,000 crore) in August this year. It is learnt the company
touched $2 billion (Rs 12,000 crore) in GMV sales during November, as the festive season
boosted sales.

Snapdeal-FINO
Online marketplace Snapdeal has partnered alternate delivery channel provider FINO PayTech to
launch assisted e-commerce centres in semi-urban, rural and low-income residential areas across
India. Snapdeal plans to set up such FINO PayTech-operated assisted e-commerce outlets or
kiosks across 70,000 rural areas in 65 cities by end of the current financial year. The first set of
assisted e-commerce outlets will come up at Dharavi in Mumbai, Varanasi, Valsad in Gujarat,
and urban villages in Noida, Gurgaon, Hyderabad and Jaipur. Snapdeal will be setting up 5000
such kiosks by the end of next year. It shows that during pilot runs of these kiosks Snapdeal
witnessed average purchase ticket size of Rs 1400, as compared to Rs 2000 in urban areas.

Snapdeal has created a curated list of over 1000 products, including speakers, juicers, solar
lanterns, diner sets, camera and mobile phones among others, which only the FINO agents can
log into. Customers can browse through products on offer and the FINO agents can place orders
on their behalf. Once the order is confirmed the FINO agent will collect the payment. Snapdeal
will deliver the product(s) to the outlets and FINO PayTech will then deliver it to the customers.

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Snapdeal take
This initiative is likely to address two key problems faced by e-commerce platforms in India
accessibility & customer reluctance towards online payments. While most e-commerce
marketplaces have tie-ups with third-party logistics service providers and have set up in-house
logistics handling arms, like SafeShip in case of Snapdeal, many tier-II and tier-III towns and
majority of rural India isnt covered. To this end, Snapdeal had also signed a MoU with India
Post last month to ensure wider reach for products on its platform, after testing India Posts
delivery service for e-retailers last year.
Wider reach also ensures that the cash-on-delivery (CoD) service can extended to larger number
of customers. This brings us to the second problem. A large number of Indians are still wary of
making online payments, which dissuades them from online shopping portals. These assistedshopping outlets would allow Snapdeal to reach customers who arent comfortable shopping
online.
SahajShopping: Srei Infrastructure subsidiary Sahaj e-Village had partnered Infibeam to launch
an online shopping portal called SahajShopping.com, in May last year. This store was
exclusively for rural consumers and the shopping was facilitated through Sahaj-operated
broadband enabled Common Service Centres.
Snapdeal-Softbank: Last month, Softbank Group confirmed investing $627 million in Snapdeal.
Following the investment, SoftBank Internet and Media Inc (SIMI) CEO Nikesh Arora joined
the Snapdeal board. Snapdeal claims to currently have over 25 million registered users and more
than 50,000 merchants on its marketplace. It also claims to offer over 5 million products across
500+ categories.

CREATION OF A WEBSITE BY USING E-COMMERCE STRATEGIES:

Strategies for optimizing a website are different from those needed to create an initial site and
make it fully e-commerce capable, e.g., creating a shopping cart to handle online transactions.
Many of the case study businesses did not initially plan or budget for the expenses associated
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with optimization. These costs include purchasing ad words from Google and pay per click ads
on search engines, and redesigning the website to focus on keywords often used in searches.
However, when faced with bearing the full costs of purchasing ad words, the business owner
decided that the costs exceeded expected revenues and abandoned the strategy. The result was
that the business dropped off the first page. The purchase of key words is akin to purchasing
television commercials or large Yellow Page ads. Each business owner must determine the
relative costs and benefits of site optimization and should make this a consideration when
developing an e-commerce strategy.

ADVANTAGES OF E-COMMERCE IN UNTAPPED AREAS

24x7 support. Customer can do transactions for the product or enquiry about any
product/services provided by a company anytime, anywhere from any location. Here
24x7 refers to 24 hours of each seven days of a week.

E-Commerce application provides user more options and quicker delivery of products.

E-Commerce application provides user more options to compare and select the cheaper
and better option.

A customer can put review comments about a product and can see what others are buying
or see the review comments of other customers before making a final buy.

E-Commerce provides option of virtual auctions.

Readily available information. A customer can see the relevant detailed information
within seconds rather than waiting for days or weeks.

E-Commerce increases competition among the organizations and as result organizations

provides substantial discounts to customers.

FUTURE OF E-COMMERCE IN INDIA

E-commerce in India has grown rapidly across the country. The growth is mostly in both travel
and retail. India is the worlds 11th largest economy and also emerged as one of the key player in
the global market. The e-commerce market in India is poised for rapid growth. According to a
report by Asia Pacific Techno graphics Online Survey 2011, e-commerce revenues in India will
increase by more than five times by 2016, jumping from US$ 1.6 billion in 2012 to US$ 8.8
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billion in 2016. According to the latest research by Forrester, a leading global research and
advisory firm, the e-commerce market in India is set to grow the fastest within the Asia-Pacific
Region at a CAGR of over 57% in 2012 to 2016. Certain unique attributes of the e-commerce
industry in India such as cash on delivery mode of payment and direct imports that lower costs
considerably are probably going to bring about a speedy growth in this industry in years to come
(Chanana and Goele 2012)

CONCLUSION
Due to the development of information technology and internet, the world market has converted
toward e-marketing and business. But the low literacy rate in the country is the basic hurdle for
the rapid growth of e-commerce; even the educated people are not able to handle i-phone, laptop
and desktop with cyber technology. This may be due to the transportation facility and courier
services are rarely available except speed post which is also facing many problems to reach the
unreachable. Unavailability of 3G service and broadband is still a question in many rural areas of
The country for the development of e-commerce.

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REFERENCES:
http://www.sxccal.edu/msccs/ecommerce1.pdf
http://www.tutorialspoint.com/e_commerce/e_commerce_tutorial.pdf
http://www.theglobaljournals.com/ijar/file.php?val=August_2013_1375511534_1c067_34.pdf
http://www.clemson.edu/uced/working_papers/uced_100702.pdf
http://www.iamwire.com/2014/01/ecommerce-cities-reach-rural-consumers-navigatelogistics/24390
https://mandtclub.files.wordpress.com/2011/10/snapdeal.pdf
http://www.business-standard.com/article/companies/snapdeal-targets-3-bn-gmv-sales-bymarch-15-114120300058_1.html
http://www.business-standard.com/article/companies/snapdeal-targets-3-bn-gmv-sales-bymarch-15-114120300058_1.html
http://www.medianama.com/2014/11/223-snapdeal-fino-paytech-e-kiosks/

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