e-com•merce • n. commercial transactions conducted electronically on the Internet.
* Oxford Pocket Dictionary
The dawn of the internet era has significantly changed the way people and organizations around the world interact with each other. What was earlier only a medium of transferring data or communication has now been replaced by a wider range of application termed as e-commerce. Products and services are now just a click away. Secure online transactions provided by vendors Visa and Mastercard as well as online bank transfers have only added to the confidence of audiences willing to participate in online commerce. The emergence of web 2.0 only fueled this trend even further. Vendors around the world have started setting up shops over the web. Entire market places for trade and commerce have sprung up online.
The story in India is no different. In a country where entrepreneurs are born in every nook and corner, e-commerce provides a low investment high return opportunity. Traditional businesses have taken their wares over the net and profited immensely from it. Now the whole world is their “bazaar”. It started slowly with bazee.com leading the way. Slowly trade portals and online travel portals joined the bandwagon. After e-bay acquired bazee.com, the level of access that users had to e-commerce increased significantly.
Although by most references India only accounts for approximately 2% of the e-commerce in the Asia-Pacific region, the amount in figures is staggering. It was estimated at around $2.1 billion in 2008 and predicted to grow to around $6 billion by 2011 (data compiled from multiple sources). This despite the fact that only 3.7% of the Indian population has access to the internet (source www.internetworldstats.com).
If one were to segregate the e-commerce sector, most transactions would fall into the following categories.
Business to Users:
o Where businesses and organizations directly offer their products and services to the users over the net. Airlines, movie theatres, publishing houses and travel agencies are predominantly present in this category. A lot of SME’s have also started offering these services to their customer base. (eg.www.makemytrip.com)
o Certain organizations use this mode to gain access to talent and freelancers over the internet and carry out projects for a global clientele. (eg. www.chillibreeze.com)
o In India banks have now almost entirely migrated to accessing through e-commerce. There is now a fee charged to customers for transactions carried out through the branches or for the physical documents provided.
User to User:
o Web 2.0 has given rise to unique opportunities to this type of transactions. Bazee.com (which was later taken over by e-bay) kicked off this trend in India. A number of other community and forum sites have also sprung up catering to this category.
o Currently newer opportunities to use web 2.0 in terms of interaction of agencies (eg.insurance agencies) are being explored.
Online Resource transfer:
o This transaction majorly deals with transfer of resources (in most cases money)over the net. Many businesses use this mode of e-commerce to eliminate physical documentation and reduce transaction time. (eg. Paypal, banks, western Union)
o Similar to User to user format trade portals are meeting point for trade agencies to interact and promote or search for specific products for import-export purposes. (alibaba.com is among the more popular sites in this category)
o Sale of ad-space is an attractive way for earning money. Although an outright purchase would be similar to buying of media space there are popular formats which make use of pay-per-click to ensure the right value of the ad-space. (Google Ad-sense has gained an expertise over this format). There are individuals who make a career out of this format.
o Another variation of this format is the presence of “invisiads” wherein games are designed by portals for companies as a part of their branding strategy. Users join in to play a game but end up leaving with information being propagated about that particular brand.
o Although still in the nascent stage in India, content access is a major share holder in the e-commerce traffic in India. Many sites provide limited access to free users and retain the full usability of their sites for premium paying customers. Market research agencies and publishing houses are major users of this format. With the arrival of internet TV and pay-per-view access in India, this category is expected to grow.
Apart from the obvious impact that online stores like e-bay have had on the Indian users there are a few traditional sectors in the Indian scenario which have been influenced by e-commerce and its applications.
One of the most significant impacts can be seen in the airline sector. This industry has been predominantly dependant on physical documentation and the presence of branches (or travel agents) for reach. However with the advent of e-commerce in India industry players have drastically changed their modus operandi.
Physical tickets have almost entirely vanished from the airline sector in India. Travel agents no longer hold a major impact on the business. The whole process has been brought online thanks to e-commerce. Apart from the web-sites of individual airlines, there are also portals which provide details of multiple airlines on one portal for the users to choose from. The balance of power has now shifted to the consumers.
As in the case of the Airline Industry the banking sector has been predominantly dependant on physical documentation and the presence of branches
For banks e-commerce has provided a major area of cost cutting. The number of branches and personnel required per area has drastically decreased. The integration of the ATM networks allows users to access their funds through multiple sources. The Core Banking Solution pioneered by ICICI bank has even allowed these banks to reach out to the far corners of India with innovative and practical solutions for low income rural families. This particular solution has given a major impetus to kick start micro-finance in India.
E-commerce promises to open up many more opportunities for businesses across sectors. What we are witnessing now is only the tip of the ice-berg.
The area of Human resource management has been completely redefined. Sites like naukri.com and monster.com have given recruiters direct access to talent from across the country. Never before had such a wide talent pool been available to recruiters. Users could now break away from the grip of placement agencies which provided commission based services and actually select jobs they want to apply to online.
This is a business that could only work in India. With arranged marriages being predominant in India this business model was uniquely prepared for the Indian market. Migrating from family pundits to online profiles was readily accepted by the Indian family. Today a number of Matrimonial sites are prospering (eg. Shaadi.com) and with tools like e-kundali to support them, they seem to be here to stay.
There are two requirements to allow e-commerce to prosper in a market.
A population with technical understanding to operate it.
User base with spending power.
The great Indian middle class fulfils both these criteria. Add to that the immensely entrepreneurial programmers that our current system is churning out, the foundations of growth have already been laid. With online gaming as well as retail being identified as a prospective sectors and constantly improving broadband connectivity, things have started looking up for the e-commerce in India. This seems to be only the tip of the ice-berg with a promise of great things to come.
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Vaibhav writes for Chillibreeze.
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