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SUMMER INTERNSHIP PROJECT REPORT


ON

E-tailing in India

Submitted In Partial Fulfillment of BBA 2013-16

To

Amity Global Business School, Ahmedabad

Submitted By:

Submitted By:

Shivam Gupta

Faculty Guide: Dr.


Pallavi Mittal

Enrollment Number:
308064103015

Faculty certificate
This is to certify that the project entitled E-tailing in India submitted by Shivam
Gupta (Enroll No. A308064103015) as a partial fulfillment for the requirement of
BBA course at Amity Global Business School- Ahmedabad is carried out under my
supervision and guidance. The facts are true to the best of my knowledge.

Dr. Pallavi Mittal

Declaration Certificate from the student


I hereby declare that the project work entitled E-tailing in India submitted to
Amity Global business School-Ahmedabad is a record of an original work done by
me under the guidance of Dr. Pallavi Mittal.

Shivam Gupta
A30806413015

Acknowledgement
I take this opportunity to express my profound gratitude and deep regards to my guide
Professor Pallavi Mittal for her exemplary guidance and monitoring throughout the
course of this report.

Shivam gupta

Index
Table of Contents
Abstract

Chapter 1 Introduction

Chapter 2 Theoretical background of the study 16


Chapter 3 Research methodology 24
3.1Research design
3.2 Sampling
3.3 Method of data collection
3.4 Scope of study
3.5 Limitations of the study
Chapter 4 Data analysis and interpretation
Chapter 5 Conclusions
References

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Abstract
The Indian Online Retail is a rich segment waiting to be exploited. Internet is a potent
medium that can serve as a unique platform for the growth of retail brands in India.
The medium holds many virtues favorable for the retail industry including a higher
customer penetration, increased visibility, and convenient operations. The current
web-based models for e-tailing are part of an embryonic phase preceding an era of
rapid transformation, challenge, and opportunity in Indian retail market. The Indian
retail market is witnessing a revolution. The growth of internet has enabled the new
retail format of the virtual retailer to emerge and forced the existing retailers to
consider e-tailing model of retailing as well. Online retailing or e-tailing is described
as transactions that are conducted through interactive online computer systems, which
link consumers with sellers electronically, where the buyer and merchant are not at the
same physical location. In a short space of time, internet retailing or e-tailing has
firmly established itself as a viable alternative to store based shopping.

Chapter 1
Introduction
With rapid growth of the Internet and globalization of market, the retail sector has
become an increasingly competitive and dynamic business environment. Business and
marketing activities are affected by the invent of Internet technologies and the Internet
is revolutionizing commerce, marketing, retailing, shopping and advertising activities
of products and services. There are several attractive attributes of Internet to not only
e-customers but also companies on time and money saving, communicate,
convenience, easy accessibility, selection from a wide range of alternatives, and the
availability of information for making decisions and all marketing activities can be
performed via the Internet efficiently. In the era of globalization, companies are using
the Internet technologies to reach out to valued customers and to provide a point of
contact 24 hours a day, 7 days a week. E-tailing and e-marketing are the two
important terms in the new Internet-based business domain. E-tailing can be defined
as a way of conducting business by companies and customers performing electronic
transactions through the Internet.
E-tailing (less frequently: etailing) is the selling of retail goods on the Internet. Short
for "electronic retailing," and used in Internet discussions as early as 1995, the term
seems an almost inevitable addition to e-mail, e-business, and e-commerce. E-tailing
is synonymous with business-to-consumer (B2C) transaction.
E-tailing has resulted in the development of e-tailware -- software tools for creating
online catalogs and managing the business connected with doing e-tailing. A new
trend is the price comparison site that can quickly compare prices from a number of
different e-tailers and link you to them.

How an e-tailing site works


Normally a user will get to know about an online shopping web site through many
ways, most frequently all online users will find websites on the go by using Google
search or any other search engines.
When they see the web site information link, they click to it, complete the website
registration process if any, choose the products they are interested, compare similar
products specification cost etc., and confirm the items selected and finalize the
invoice and make payment via their debit card / credit card bank account or via Pay
Pal or Google checkout.
Once the payment is received the merchant will receive the payment, start processing
the order, and ship the product to the users delivery / shipping address.
Further if the product is carrying warranty, post-sales support and service should be
facilitated to the customer in order to create good word of mouth and get a good
returning customer base which is the key success factor for the e-Retailer.
1. Online visitor of the site will pick up the items to be purchased.
2. Confirming / finalizing the item list selected and checkout.
3. Enter the credit / debit card / Pay Pal information to make the payment.
4. User payment information is getting checked with banker via payment gateway and
once its authenticated.
5. The payment will be credited to retailer account and an Order confirmation is
shown to the visitor along with order details and shipping information.
The visitor will also be notified on the purchase made via email.
The visitor will be able to track their order status and an SMS / email update will be
frequently sent to visitor on the product or service delivery.

Importance of e-tailing to grow in India


Generate employment
E-tailings employment potential, which is rarely discussed because of its current size
and scale, entails two dimensions the absolute volume of employment, and the
attractiveness of e-tailing as a destination for high quality talent. E-tailing has the
potential to generate direct employment for nearly 1.45 million people by 2021
Employment in logistics is presently generated by third party logistics (3PL)
providers who are engaged in order deliveries, and, in some cases, with e-tailers who
have in-house last mile delivery expertise. However, these are severely limited in
terms of capabilities and scale. With the growth of e-tailing to the projected size of
USD 76 billion by 2021, the logistics industry will witness the emergence of players
with scale. To tap this opportunity, some of the existing players may grow in size,
while other established logistics solution providers may tweak their business models.
Many new players may also emerge. In either case, the spurt of e-tailing will call for
delivery capabilities that will in turn require the deployment of a vast number of feet
on the ground, creating a potential 0.8 million jobs by 2021.
Warehousing jobs demand the deployment of people in order processing centers that
are engaged in the function of integrating orders from various vendors with orders
received from the customers. Orders are received from a large base of customers in
small units (typical basket size of 1-2). However, orders are placed with a large
number of vendors in high volumes. In some cases, orders are directed to vendors
who ship the products directly to the customer. This is a high precision process that
requires order picking and processing capabilities with minimal room for error.
In mature e-tailing markets, this function is carried out by fulfillment centers. These
centers are nearly 250,000 sq. ft. in size and resemble a factory-like setup of complex
assembly lines. An average fulfillment center or warehouse in the
US employs 800 to 1800 workers during non-peak times which can increase by 50%
or more during the peak period.

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India currently lacks this capability. Currently, the system is improvised by e-tailers to
meet the immediate demand. If e-tailing in India has to grow to the projected size, it
will require massive warehousing and order processing capabilities.
There will, however, be one difference in this capability generation - India may not
take a high-end technology adoption route due to its relative advantage in terms of
labor costs. This function will therefore have the potential to generate employment for
nearly 0.25 million people by 2021.
Technology jobs for e-tailers require a large number of technical experts that are
primarily deployed in three functions:
a. Developing & improving the e-tailers online interface in order to enhance customer
experience on the web portal
b. Developing proprietary algorithms to increase online traffic (i.e. more customers
visit the website) and improve conversion (more customers buy on the site), and also
measuring and analyzing consumer behavior for proactive targeting
c. Building in more efficiency and control in the supply chain
In mature e-tailing markets, these technology-related functions have evolved to such
high levels of complexity that many e-tailing companies view themselves as
specialists in web technology and analytics. It is not surprising then that, even with
the small current size of e-tailing in India, the industry has managed to attract the best
engineering and management brains. The e-tailing market will emerge as a destination
for highly-skilled technology jobs employing nearly 0.3 million people by 2021.
Besides the above functions, e-tailing will require employees in several other roles
like customer care, merchandising, vendor management, and content development, as
well as in regular corporate functions like HR, finance & accounts, administration,
etc. These will add nearly 0.1 million employees to the workforce by 2021.
Indias education system will need to create a vast pool of people who will bring to
these e-tailers and their service providers the requisite skills, which may vary from the
highly creative to the highly technical. The current size of e-tailing, however, neither
generates traction for this talent in large numbers nor will it prompt the development
of e-tailing-focused curriculums and courses. Unless e-tailing grows to a sizeable
scale, its ecosystem will not proliferate to a critical mass that can become an attractive
employment destination for these skills. For instance, today, the simple need of
creating a vernacular website, i.e. one customized to the local dialect, is constrained
by the lack of capable content writing service providers.

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Facilitate growth of allied industries


E-tailing becomes a viable business model when it efficiently generates demand,
sources products from vendors, and delivers them to consumers. Conceptually, this is
not very different from traditional brick & mortar retailing. However, unlike brick &
mortar retailing, e-tailing does not require the opening of physical stores to capture
consumer demand.
Instead, it needs an effective and inspiring website through which customers can
access product information and place orders. This requires the coming together of
many stakeholders so that the website stands out amid the crowd of the
Internet, anticipates customer needs to display the right products, and holds the
customers imagination all the way to a purchase. Once the order is placed, it passes
through another set of stakeholders who bring the ordered product to the customers
doorstep. Most e-tailers therefore view themselves as supply chain and technology
integrators who manage a complex web of many stakeholders (besides direct
employees), each of whom brings in specialist skills and roles to the e-tailing process
primarily dependent on the trajectory of e-tailings growth. Therefore, the notion that
e-tailings growth will create an inequitable revenue share in favor of the e-tailer is
not true. On the contrary, the growth of e-tailing will enable the growth of these allied
industries and functions.
Here it is important to highlight the interdependence of the evolution of the logistics
industry on e-tailings growth and vice-versa. Logistics solutions for e-tailing demand
the creation of the capability to service orders directly to customers.
It requires central warehousing capabilities in order to receive merchandise in bulk
from the vendors, and pick up and process this merchandise as individual orders.
Given the geographical complexity, suboptimal infrastructure and regulatory
variations across the country, logistics in India has always been challenging. It has
also been more of a B2B service, with the result that the B2C logistics ecosystem,
which requires customer interaction, cash handling (cash-on-delivery being ~50-60%
of all deliveries), and returns handling, is still a new and underdeveloped capability
for third party logistics (3PL) providers.
Some of the more established e-tailers have invested in setting up their own last mile
delivery networks, which is the only tangible customer interaction, and also because

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most 3PL players are still in the process of developing efficient And comprehensive
logistics networks.
This is however changing. Many 3PL providers are now geared up to service e-tailing
clients and building dedicated verticals for this purpose while many others are fast
adding the capabilities required for this sector. Many new e-tailing focused players
have emerged. Some e-tailers are transitioning their logistics arms into service
providers for other e-tailers as well. This move is the outcome of necessity, given the
lack of viable alternatives. Ideally, e-tailers will be more than happy to outsource last
mile delivery to a specialist viz. a 3PL provider. This sector has the potential to
benefit by
~USD 5 billion annually by 2021.
It is interesting to envisage a role for India Post in the last mile delivery. India has ~
21000 pin codes, and most 3PL players are able to reach about 8000-10000 pin codes
at best. India Post, with its formidable network across urban and rural India, and its
already established mechanism to handle money orders, can harness this opportunity
in a big way.
Recent media reports indicate that it already has its eyes on this emerging space.
Internationally, case studies of the US Postal Service (US) and Deutsche Post
(Germany) demonstrate that these organizations have attempted to remain relevant in
the changing times by tapping into and benefitting from the growth of e-tailing in
their respective countries. Both these organizations are significant players in
delivering parcels to e-tailing customers.
A similar interdependence should be explored between the growth of e-tailing and
benefits to other industries like domestic air cargo, telecom, and banking.

Promote entrepreneurship
One of the most successful arguments in favor of e-tailings business model is its
ability to boost entrepreneurship.
Many of todays leading e-tailing businesses were start-ups a few years ago. This
trend continues as more and more names join this list. However, it is a less talked
about fact that the growth of e-tailing creates enabling conditions for entrepreneurship

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across the entire e-tailing value chain. E-tailing will positively impact the
development of entrepreneurship in India in two ways:
a. It will provide easy access to consumer markets (new and existing), which will
enable the growth of merchandise vendors
It will open up opportunities for entrepreneurs to become service providers to the etailing business
b.

a. Easy Access to Consumer Markets


The growth of e-tailing will result in the emergence of tremendous opportunities for
merchandise vendors to explore new consumer markets, both domestic and
international, and also achieve scale. This will not only attract existing vendors to etailing but it will also witness the creation of new businesses that will want to tap this
opportunity.
India is a base for many vendors that service world-renowned brands and retailers.
The country is also a base for proprietary and ethnic merchandise products that have a
vast global appeal. However, existing structures and transaction costs do not allow
these vendors to fully explore domestic and global opportunities.
E-tailing can emerge as an enabling platform for vendors to tap such opportunities as
cross border tie-ups which either leverage e-tailings reach to access regional markets,
reach out to leading e-tailers for vendor opportunities, or launch own e-tailing routes
and directly reach out to customers. Such a range of possibilities can prove to be a
boon to the pockets of numerous local artisans who make a myriad of products
ranging from fashion wear to home improvement
Such opportunities will not only spur the demand for an increased vendor base but
will also catalyze the deployment of capital required to increase the capabilities
needed to service this demand.
The mention of an online Indian ethnic wear player is merited to support this
argument. In its ten year-long journey, this India-based player has managed to build a
successful e-tailing business that focuses on Non-Resident Indians (NRIs), i.e. Indianorigin people living outside India. The player procures and customizes ethnic wear for
women and men from over a 1000 vendors, and sells these products directly to
customers. The business earns foreign exchange, is understood to be profitable, and
has successfully created a market with direct access to NRIs in over 30 countries. An
evolved e-tailing business environment can thus serve as a strong catalyst for

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merchandise vendors to explore many such direct-to-customer global opportunities in
a number of ways.
b. Create opportunities to build new capabilities as service
providers
While some e-tailing interventions are similar to those of brick & mortar retail, the
key difference for an e-tailer lies in the technology, marketing, packaging, and
logistics interventions.
We have already highlighted how e-tailing is leading to the emergence of newer
players in the logistics space. The growth of e-tailing also creates numerous
opportunities for entrepreneurship in the technology, packaging, and marketing
domains. In many instances, e-tailers require these functions to provide very specific
and nearly customized solutions, which may lack scale and thus not attract big service
providers. Then again, there are cases wherein vendors simply dont exist to cater to
such needs. Therefore, many freelancers, start-ups and small enterprises move in early
to leverage this opportunity. This scenario has fuelled the start-up culture around etailing in mature markets.
A similar scenario will play out in India; by 2021, such firms, small enterprises, and
freelancers will have the potential to earn ~USD 7.5 billion annually by providing
services to e-tailing businesses. The profiles of such entrepreneurial ventures will be
as diverse as the services they provide, and they will require specialized skills ranging
from creative writing to statistics.
Reduce transaction cost
One of the biggest advantages of e-tailings business model is its ingrained ability to
reduce transaction costs. Transaction costs here refer to the costs incurred in making
an economic exchange, which, in retailing, involve three elements:
Cost of distribution of goods
Use of leverage (credit) in the supply chain
(Un)certainty of tax receipts
Retailing in India involves high transaction costs. Market structure and infrastructure
inadequacies are the key reasons for this high cost. A normal retail transaction in India
involves the movement of goods through a multi-layered distribution system from the
producer/manufacturer to the customer. These layers of the distribution system entail

15
distributors, wholesalers, dealers, etc. who sit across geographies in a layered
hierarchy. There are three challenges with such a structure.
The first challenge is that each layer of distribution adds an extra cost in making the
goods reach the final consumer. In this process, this structure makes the price of the
goods higher for both the consumer and the manufacturer (due to a fixed price
regime).
The second challenge is the existence of credit in the system which strains the
working capital of all stakeholders. Many a times, the layers in the system primarily
act as financers to facilitate the movement of goods from manufacturers to consumers.
One key reason for the presence of such an arrangement is the lag between the time of
sale at the customer end and the time the manufacturer becomes aware of it.
The third challenge is that most retail transactions at point of sale are in cash. This
creates a leeway in the system for tax leakages, viz. under-invoicing, under-reportage
of sales, etc.
The projected growth of e-tailing in India will successfully address all the three
challenges. The cost of distribution will reduce because the multi-layered distribution
system will be replaced by an order fulfillment process arranged in a hub and spoke
model. The layers of distributors will not be required here as this role will be fulfilled
by warehousing and logistics operations which offer margin enhancement
opportunities for manufacturers and better prices for consumers.
Again, given that e-tailing is made possible by the electronic medium of the Internet,
the immediate recording of point of sale data and payment receipts, and the absence
of intermediaries in e-tailing chain allows smoother and faster flow of money and
information from the customer to the e-tailer and subsequently to the manufacturer.
This has the potential to drastically improve the manufacturers and the e-tailers ability
to manage business with lesser working capital and reduces the credit levels in the
system.
Finally, e-tailings business model provides a transparent retailing environment for
both the customer and the e-tailer.
E-tailing provides an electronic point of sale that records sales and thereby creates a
certainty in the system about the actual volume/value of sales. Even if the customer
decides to pay in cash (i.e. through cash-on-delivery), this eliminates any scenarios of
under-invoicing and under-reportage. An explicit advantage of this system is that it

16
increases the certainty of tax receipts (i.e. of VAT, CST, etc.). Such tax collections are
projected to be USD
7.6 billion in 2021.

Chapter 2
Theoretical background of the study
E-tailing, with its unique competitive advantage is taking more and more market
shares from the traditional retailer industry. The frequency of customers going to
shopping malls, and the average time customers are spending in malls is dropping.
Consumers decision-making process has considerably changed with the introduction
of the Internet as an alternative channel for shopping. The new wave of consumerism
coupled with increasing urbanization and burgeoning middle class with paradigm
shifts in their demographic and psychographic dynamics have driven consumers
frequently to use retail websites to search for product information and/or make a
purchase of products. In India, the shift from physical stores to e-store takes place due
to the in-adequacy of time of consumers and the relatively high disposable incomes as
well as due to a high need for labor-saving goods and services.
A large segment of Indian consumers is price sensitive and always on the lookout for
good bargains. Most e-tailers in India are trying to acquire consumers by offering
heavy discounts often below the cost price, which is not sustainable in the long run.
Though price discounting, direct or through bundling, deals, flash sales etc. will
continue to be an important driver for online purchase, there is an increasing
realization among e-tailers that this alone does not drive loyalty. The high customer
acquisition costs (which is above Rs.1000 per customer for many players) imply that
each customer needs to transact at least 3-6 times for a player to justify such costs.
With an increased bottom-line focus, several players are trying to move away from
the lowest price proposition and trying to inculcate loyalty through others factors too
like product/ service offerings, interface experience, efficient fulfilment etc. Along
with price, these will become important as e-tailing market matures.

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With increasing Internet penetration, people are getting entrenched into the online
space, and spending a lot of time on social networking platforms. Globally, an
estimated 25% of the time spent by users online is on social networks. The number is
equally high in India at 22%.
Companies across the globe are increasingly using the social media platform as a
marketing tool and focusing on their social media strategy to capitalize on the
platforms strengths, viz. high consumer traffic, direct communication and low costs.
The time is not far when consumers will also increasingly transact through social
networks giving rise to social commerce. The phenomenon is already in the early
stages of development, enabling people to connect where they buy and buy where
they connect-shopping and socializing are converging in the online world too. The
global social commerce market is projected to grow from USD 5 billion in 2011 to
USD 30 billion by 2015.
E-tailing not only enables companies to create visibility and reach a wider consumer
base but also offers a better cost structure as compared to brick-and-mortar retailers.
Hence, e-tailers are able to pass on higher price discounts to consumers.
Online stores vis--vis physical stores have typically lower rentals and employee costs
even though fulfilment costs for an e-tailer are higher.
This makes the online channel a threat to brick and- mortar retailers, affecting the
latters sales globally. The effect is more pronounced in some categories, e.g. books.
As per the UK Booksellers Association, the count of independent bookshops in UK
has dropped from ~1500 to 1100 between 2006 and 2011. Similarly, in India, the
books category has seen the emergence of many online retailers, which has affected
traditional booksellers with many of them seeing an estimated 20-25% decline in their
sales.
One of the biggest advantages of e-tailings business model is its ingrained ability to
reduce transaction costs. Transaction costs here refer to the costs incurred in making
an economic exchange, which, in retailing, involve three elements:
Cost of distribution of goods
Use of leverage (credit) in the supply chain
(Un)certainty of tax receipts
Retailing in India involves high transaction costs. Market structure and infrastructure
inadequacies are the key reasons for this high cost. A normal retail transaction in India
involves the movement of goods through a multi-layered distribution system from the

18
producer/manufacturer to the customer. These layers of the distribution system entail
distributors, wholesalers, dealers, etc. who sit across geographies in a layered
hierarchy. There are three challenges with such a structure.
The first challenge is that each layer of distribution adds an extra cost in making the
goods reach the final consumer. In this process, this structure makes the price of the
goods higher for both the consumer and the manufacturer (due to a fixed price
regime).
The second challenge is the existence of credit in the system which strains the
working capital of all stakeholders. Many a times, the layers in the system primarily
act as financers to facilitate the movement of goods from manufacturers to consumers.
One key reason for the presence of such an arrangement is the lag between the time of
sale at the customer end and the time the manufacturer becomes aware of it.
The third challenge is that most retail transactions at point of sale are in cash. This
creates a leeway in the system for tax leakages, viz. under-invoicing, under-reportage
of sales, etc.
The projected growth of e-tailing in India will successfully address all the three
challenges. The cost of distribution will reduce because the multi-layered distribution
system will be replaced by an order fulfillment process arranged in a hub and spoke
model. The layers of distributors will not be required here as this role will be fulfilled
by warehousing and logistics operations which offer margin enhancement
opportunities for manufacturers and better prices for consumers.
Again, given that e-tailing is made possible by the electronic medium of the Internet,
the immediate recording of point of sale data and payment receipts, and the absence
of intermediaries in e-tailing chain allows smoother and faster flow of money and
information from the customer to the e-tailer and subsequently to the manufacturer.
This has the potential to drastically improve the manufacturers and the e-tailers ability
to manage business with lesser working capital and reduces the credit levels in the
system.
Finally, e-tailings business model provides a transparent retailing environment for
both the customer and the e-tailer.
E-tailing provides an electronic point of sale that records sales and thereby creates a
certainty in the system about the actual volume/value of sales. Even if the customer
decides to pay in cash (i.e. through cash-on-delivery), this eliminates any scenarios of

19
under-invoicing and under-reportage. An explicit advantage of this system is that it
increases the certainty of tax receipts (i.e. of VAT, CST, etc.). Such tax collections are
projected to be USD 7.6 billion in 2021.

Benefits of e-tailing
Convenience
Normally, online stores are usually available 24 hours a day, and many consumers
have internet access both at work and at home.
Price and selection
One of the biggest advantages of online shopping is to find out quickly deals for items
at services with many different vendors. Search engines , on-line price comparison
services and discovering shopping items can be used to find out sellers for a particular
products or services. Some retailers also offer free shipping on sufficiently large
orders. Searching an online catalogue can be faster than browsing the physical
catalogue of a brick and mortar store.
Market research
Retailers can use their online presence as a tool to gain valuable customer information
to forecast future customer demand. Online market research has some powerful
advantages, such as monitoring real-time buying decisions. In addition, online
customers have the knowledge and experience necessary to answer the questions,
which produces more accurate and reliable data.
Online customer service
In India, websites are becoming new channels for conducting customer service; therefore
their general acceptance level will increase, due to the benefits provided to customers. For
example, a customer could ask for a product introduction or a personalized product in the
pre-purchase stage, and could also check the delivery status online. All such services can
be available uninterrupted online, which is almost impossible in the physical world, due
to the cost.

Promotional channel
A website can be used as a medium to conduct promotional experiments, due to the
wide reach of the internet, and the low cost. Therefore, it will be a great opportunity
for Indian companies to promote their businesses.
Marketing tool

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A website is also an effective channel to communicate with customers. Organizations
do not need to rely solely on one-way communication media, such as TV and
newspapers. The internet provides a two-way communication channel. As a new
communication channel, the internet can provide benefits to retailers, such as low
costs, interactivity, personalization, and continuous communication. By better
understanding consumers through customer relationship management, marketers can
employ relationship marketing techniques in the retail market to provide personalized
services.

Challenges in e-tailing
Lack of touch-and-feel a mental barrier for online shopping
Most Indian consumers prefer to sample a product before making a purchase. This
applies across categories such as clothing, shoes, perfumes and accessories. Lack of
touch-and-feeling online shopping could lead to issues such as wrong product sizes
(in shoes and clothing).
This creates a mental barrier for consumers to shop online.
Increased competition with the entry of global players
The growth potential of the online retail segment in India is attracting leading
international players. The entry of international players would increase competition in
the segment. The advanced technology capabilities of global players in areas such as
customer analytics and recommendation engines would pose a challenge for local
companies.
International players have larger financial resources than their Indian counterparts.
This enables them to bear losses and restrict supplies to their competitors by buying
out supplies from vendors. This could drive out smaller domestic players from the
market.
Low margins prompting e-Commerce players to look at new business models
The majority of e-Commerce companies are price players due to the stiff competition
they face and the race to acquire the maximum number of customers. This results in
very low margins or none at all.
E-Commerce players could look to adopt new business models to increase their
margins. One such example incudes private labels
Controlling customer data

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As the delivery services are becoming more modern in using information technology,
e-tailers may face some risks to properly handle on their consumer data. The data
related to the socioeconomic status of customers to their buying patterns and
preferences, helps intermediaries and shippers reduce costs.
Problems with the payment system
People in India are not accustomed to the online shopping system and moreover the
online payment system through the credit card is also totally alien to them. Most of
them do not avail of the transaction facilities offered by the credit cards. They are also
dubious regarding the online payment system through the credit cards. Companies
should protect their system from hackers as customers often worry about theft of their
personal information, such as a credit card number. Both technological and legal tools
should be used to enhance the security of e-commerce

Lack of full disclosure


It is easy to compare the basic price of an item online, it may not be easy to see the total
cost up front as additional fees such as shipping are often not be mentioned.
Handling returns
The problem of returns is very much prominent in e-tailing businesses in India. The
customers can return defective or unwanted merchandise which he receives. E-commerce
retailers, with their emphasis on convenience and customization, must match this standard
of service. At present, they do not.

Delivering the goods cost effectively


At present, every single transaction challenges e-tailors to deliver the goods quickly,
cheaply and conveniently. The existing mode for home delivery works well for letters and
flat packages but not for e-tailing as it encompasses with high volumes and wide variety
of package shapes and sizes.

Problems with shipping


The customers using the online shopping channel should be assured that the products that
they have ordered would reach them in due time.

Language problem
Most internet retail shops use English as their mode of communication. English may not
be comprehensible to the majority of the Indian population. To increase the customer
base, content in the online retail shops should be provided in local language.

22

Measures to improve e-tailing


Prompt delivery
The first major challenge faced by e-retailers was high expectations for prompt
delivery of Web orders by customers. One of several delivery options such as, express
(next day), priority (three to four days) and regular (five to ten days) may be selected
and paid for by the customer while ordering the product.
Supply chain
Ensuring supply of required amount of raw materials and products at the right time for
the right price as well as proper slotting and picking methods are very much important
for effective operating of e-tailing. E-retailers must have reliable supply-chain
partners with the support of a back end supply-chain management systems. Proper
slotting and picking methods based on the size, weight and demand nature must be
devised to receive, slot, pick and pack properly. A warehouse management system
should be a part of the supply chain management system to oversee the activities like
order sorting, packing, and final bar coding for shipment.
Demand nature
Successful e-retailing companies will have to assess the supply and demand condition
so that they can meet unpredictable demand. A news-worthy event can create a huge
demand for a product within a short time. Seasonality factor also contributes to the
unpredictability of the demand nature. Popular items may need to be assessed on its
future demand to avoid processing delays. Proper use of seasonality factors in
forecasting models may contribute to better demand forecasting for highly
unpredictable items.
Reverse logistics
In any retail business, some products are returned from the point of consumption.
Therefore, the challenge is setting up infrastructure and procedures for reverse
logistics. The process is not only inevitable but also gaining importance as a viable,
sustainable and profitable business strategy. Procedures need to be established for
returning orders. Drop-off points must also be set up. A customer wanting to return

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merchandise should be encouraged to have authorization to do so through the Web
site. The e-tailors need to have an understandable product return policy on the Web. A
copy of the same policy may also be included in the shipped package. A customer
must identify the reason for returning the item. Based on the reason, one of several
actions such as restocks, recycle, remanufacture, and send back to the supplier may be
taken. A flexible sorting or packaging line in the warehouse may be used to handle
returned items when needed.

Accuracy
To achieve high levels of accuracy in e-tailing business, the firm must consider the
right equipment to increase accuracy. This will augment the nature of its operations,
and the level of adjustment that managers are willing to make to minimize human
errors. But if companies gather and analyze warehouse performance statistics
regularly, invest in automated data collection and verification systems and equipment
to the extent possible, create efficient picking procedures, and train all employees
thoroughly, then they can improve their accuracy level and streamline the customer
fulfillment process. Order fulfillment rate, accuracy of order fulfillment and cost per
order fulfillment are among important indicators need to be evaluated routinely.

Objective of the study

This research aim is to see the consumer behaviour towards online shopping sites

in India.
To see the challenges of e-tailiers.
To study which product is sold most online.

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Chapter 3
Research methodology
3.1 Research design
Research is based on the questionnaire and people responses
3.2 Sampling
Samples were collected from consumers of age group 18-25 years in Ahmedabad to
know their opinion about e-Retailing. The total sample size of respondents was 10.
3.3 Method of data collection
Both the primary and secondary methods of data collection were used. The primary
data was collected through a structured questionnaire. Secondary data was collected
from News Papers, Books, Journals, Research papers and Websites.
3.4 Scope of study
The scope of study is to determine the consumer behaviour of people in India.
Challenges of e-tailiers and people thinking about online shopping.
3.5 Limitations of the study
The study was done on common mindset of people and it included limited number of
people.

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Chapter 4
Data analysis and interpretation
The responses of the questionnaire were analyzed and results were made
Following were the findings

Findings

70% of the consumers are using online shopping websites from 1 to 2 years.
More than 80% of use online shopping websites for shopping as well as

comparing products.
50% of the people use Flipkart, while 30 % prefer Snapdeal and 20% Amazon

and other websites.


30% people bought products or are interested in are apparels and accessories,

40% in books and 30% in electronics and others.


70% thinks discount on products online are more helpful and 20% on more

choice of products and 10% on free and fast delivery.


90% thinks application of online shopping site has increased.
70% agrees that online shopping has more advantage then traditional

shopping.
70% people uses cash on delivery as there payment method while 20% uses

debit card and 10% internet banking and credit card.


60% thinks that lack of trust and awareness are challenges in online shopping

while 40% thinks lack of internet.


70% thinks Government of India is taking steps to improve e-commerce.
80% thinks future of e-commerce is good in India.

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Chapter 5
Conclusions
The current growth in e-tailing was driven by start-ups, and backed by venture capital
and entrepreneurship. While the Indian e-tailing market is yet to achieve a steady
state, these initial entrants have succeeded in capturing the imagination of a sizeable
consuming class. These have also acted as a catalyst in the creation of an ecosystem
necessary for the growth of e-tailing.
E-tailings potential cannot be tapped on the premise that investments by a few
organizations will unlock this opportunity. Going forward, the projected size of etailing by 2021 will not be composed of pure e-tailing companies, as is largely the
case today.
E-tailing is an integrator of technology, logistics, and infrastructure, and creates a
relatively efficient marketplace for vendors and consumers. At present, the Indian etailing market is limited by its incapability to play the role of an efficient integrator.
For the growth of e-tailing over the next decade is based on the premise that the
current capability of e-tailing will be significantly transformed, which will require the
infusion of both capital and knowledge. This role has been played in other places by
retailers, technology companies, venture capitalists, and private equity investors.
Given the fact that the current share of corporatized retail is under 10%, and that the
domestic venture capital industry is still in its infancy, policymakers will need to seek
a rapprochement with investment and expertise from overseas players.
E-tailing has to be viewed in the context of the profile of India that is poised to
emerge over the next decade. This emerging India will comprise consumers who will
have the desire, need, and conviction to use the Internet for a host of reasons, of
which shopping will be one.
E-tailing has been often clubbed with corporatized brick & mortar retail. While there
is no denial of the fact that it serves the same end purpose, it also cannot be denied
that the entire ecosystem within which e-tailing operates is completely different from
brick & mortar retail, as are its enablers. Therefore, it deserves to be considered on its
own merit, instead of being clubbed with brick & mortar retail. This will necessitate
an appropriate response from policymakers to facilitate the growth of an ecosystem
conducive to e-tailing and should include:
Opening up of e-tailing for international capital and knowledge infusion
Facilitating the smooth rollout of wireless data access and broadband connectivity

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Incentivizing B2C logistics and warehousing capability building, including the
option of building B2C capabilities into India Post
Implementing the Goods and Services Tax, or GST
It also demands a spirited response from the private sector involving:
Capital deployment in B2C logistics, domestic air cargo services, and warehousing
industries
Adoption of e-tailing as a key growth driver by retailers and consumer products
companies
Promotion of entrepreneurship to create relevant technology, analytics, and
packaging solutions
Building sustainable and India-specific e-tailing business models, especially in
wholesaling and distribution
Aiming for best in class capabilities across the e-tailing value chain to compete in
the global arena
However, this leap of faith will not happen on its own. If e-tailing continues to be
regarded by policymakers as being insignificant, and by business organizations as a
passing fad
E-tailings current growth is like the birth of a new industry and akin to the birth of
telecom and IT services in the 1990s.Both started small and recorded disruptive
growth that changed our lives in many ways. E-tailing will have to be viewed as a
vehicle that will drive efficiency, create new capabilities, and shun mediocrity.
E-tailing possesses the potency to create new capabilities which India needs and offer
viable employment to Indian youth over the next decade. It has the prowess to act as a
catalyst and support the growth of new skills and industries. If e-tailing is ignored as a
non-descript and trivial entity, it will be another case of a birth with congenital
disorders, akin to brick & mortar retail.

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References

Dr. Dawn Sumankumar- e-tailing in India


Ernst and young-Re-birth of e-commerce in India
www.Researchjournal.com
Tecnopak-E-tailing in India