Open Access Research Article
ISSUES AND CHALLENGES FACED BY THE E-COMMERCE INDUSTRY IN INDIA
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ISSUES AND CHALLENGES
FACED BY THE E-COMMERCE INDUSTRY IN INDIA.
AUTHORED BY - POOJA N HATYAL & DR, CHRISTABELL JOSEPH
ABSTRACT
The e-commerce industry is a potential game changer.
People in India are slowly and gradually shifting from physical stores to
online or virtual shopping. In simple, electronic commerce is the buying and
selling of goods and services with access to the Internet. It is indeed
noticeable that there is an increase and growth in the e-commerce market in
India. India is the most attractive country for emerging markets for the e-commerce
industry; the issues and challenges of e-commerce must be noticed. There are
several issues and challenges before the e-commerce industry, including cyber
and data security, technology issues, digital illiteracy, language acting as a
barrier, taxation issues or the challenge to access. Although the market has
not broken down, consumers round-the-clock shop efficiently at their
convenience with just a few clicks.
Even
after all the issues and challenges faced by the e-commerce industry, there are
a few online mammoths like flipkart.com, makemytrip.com, meesho, firstcry.com
and many more that have overcome the challenges and have shown escalation in
growth trends of e-commerce in India. One massive push for the growth of
e-commerce was during and post covid pandemic, which made the retailers embrace
e-commerce locally and globally. Also, consumers actively participated in
shopping during the same time. A few significant factors for the growth of
e-commerce in India are customer convenience, increasing internet usage,
curated e-commerce, safe and secure payment options, pricing and discounts,
rise in digital literacy and government initiatives like Digital India, e-market
and skill India.
The
E-commerce industry can overcome issues and challenges by finding suitable
solutions. A few significant factors for the growth of e-commerce in India are
customer convenience, safe and secure payment options, pricing and discounts,
rise in digital literacy, governmental initiatives like Digital India, e-market
and skill India. This growth in the e-commerce industry is successfully
reaching out to the general masses with the help of social media, which is not
only a platform for advertisement but also for receiving feedback for promoting
new launches and helps to build brand image. With the help of social media,
retailers can keep track of first-time and repeat buyers of a product. Spending
patterns and lifestyles of consumers can be predicted and studied with the help
of social media.
E-commerce
business in India will increase and positively affect the country's economy and
retail industry. There are more advantages of e-commerce than disadvantages
that can be overcome. It is a win-win situation for businesses and customers in
the e-commerce industry. The e-commerce market will be more competitive and
diverse, is the prediction. It is rewarding to run a successful e-commerce
business, but still challenging. Customers in India return the commodities that
they purchase online. The payment mode preferred mainly by the customers is
cash on delivery. Besides these difficulties, legal issues include E-
contracts, data protection, Intellectual property rights, competition,
advertisements, etc. The present paper intends to study e-commerce by throwing
light on the problems and challenges faced by the e-commerce industry in India
and the opportunities and future of the same. This paper also suggests and lays
out steps for the development of the e-commerce industry and solutions for its
challenges.
Keywords: e-commerce, customer, challenges,
internet, India
Introduction
Due
to rising internet penetration, smartphone use, and the expansion of the middle
class, the Indian e-commerce market has experienced tremendous growth and
transformation in recent years. The sector above has emerged as a crucial
element of India's digital economy, providing customers with the ease of
e-commerce and empowering enterprises to expand their customer base. But along
with this quick development and growth come several challenging problems that
the Indian e-commerce sector has to deal with. In this regard, to obtain a
thorough understanding of the dynamics and potential of this business, it is
essential to investigate and comprehend the myriad problems that it encounters,
ranging from logistical challenges and regulatory obstacles to customer trust
and competition. Everyone in India has a limited amount of time and is online
aware. In this case, everyone wants to buy items without having to go and to
save time. Demand for the e-commerce industry and its area is rising, along
with the need for an outstanding assortment of services of a specific kind. In
every aspect of business, including customer service, new product development,
and design, e-commerce is already present. India's e-commerce industry is
expanding due to the availability of a large selection of low-cost products,
large online suppliers, and a customer pool. Nowadays, every company unit wants
to be a part of an online company due to India's growing internet user
population. In India, e-commerce is still expanding, but it presents a significant
opportunity.
Meaning and definition of e- commerce
E-commerce
is the use of electronic communications and digital information processing
technology in business transactions to create, transform, and redefine
relationships for value creation between or among organizations, and between
organizations and individuals.[1]
Numerous programs are used in e-commerce. Such as file transfer protocol, web
services, electronic data exchange (EDI), fax, online catalogues, shopping
carts, and electronic data interchange. Given the range of products and
services available today, online purchasing is increasing the allure and
convenience of online shopping for customers
nationwide.
E-commerce, as a representation of globalization, is the pinnacle of success in
this digital age, which has altered and continues to alter how business is done
globally. Electronic commerce has become the most popular due to the internet's
commercialization. The best routes for business processes that cross corporate
boundaries.
The
electronic interchange of business data, transactions, and other types of
communication about the purchase and sale of goods and services is another
definition of e-commerce. Digital payment systems, online marketplaces, retail
storefronts, and other online platforms and technology that support these
electronic transactions are all included. With its rapid growth in recent
years, e-commerce has given consumers and businesses new ways to interact,
trade, and transact in a digital world.
Electronic
commerce, or e-commerce, is a type of business model, or segment of a larger
business model, that enables a firm or individual to conduct business over an
electronic network, typically the internet. Electronic commerce operates in all
four of the major market segments: business to business, business to consumer,
consumer to consumer, and consumer to business. It can be thought of as a more
advanced form of mail-order purchasing through a catalog. Almost any product or
service can be offered via e-commerce, from books and music to financial
services and plane tickets.[2]
In electronic commerce, payments for products and services are made
through various means, including bank transfers, digital wallets, credit/debit
cards, and other online payment systems. Digital channels include social media
sites, smartphone applications, webpages, and other online interfaces that help
with the transaction process and are used for e-commerce activities. A
worldwide marketplace made possible by e-commerce gives companies access to
clients across national borders, facilitating trading internationally and
expanding their customer base.
E-commerce may be thought of as a digital version of mail-order
catalog shopping. Also called online commerce, e-commerce is the transaction
between a buyer and a seller that leverages technology.
Issues in E commerce
Product delivery/exchange of goods
The efficient and punctual delivery of goods is ensured
by the courier services provided by multiple organizations to deliver different
products and services. The trading of products, or e-commerce businesses,
picking up the items from customers on time is another major problem.
The genuineness of the goods
Customers must receive authentic and genuine branded and
non-branded goods from various vendors.
Competition in Prices
When purchasing, customers examine the costs of the goods
provided by the different e-commerce websites. Therefore, it makes it difficult
for the vendors to update and maintain the product's pricing on websites to
increase sales.
Less awareness
Knowledge of the different products offered in the online
e-commerce sector is necessary. Most regions have lower levels of awareness
regarding online e-commerce goods.
Product objective
There must be an excessive number of things available on
the internet market. This is only possible if the sellers update themselves in
light of the products' demand (taste and preference).[3]
Challenges faced by e commerce industry
Even
while there are many opportunities in the e-commerce industry, there are also
several unique obstacles that might be challenging for a new firm to overcome.
Nonetheless, India has unquestionably been a lucrative e-commerce industry for
the previous seven years running. Therefore, regardless of how big or small the
firm is, many venture capitalists, angel investors, private companies, and
high-net-worth individuals are investing money in e-commerce. E-commerce is
expanding quickly, but there are still several obstacles in the way of its
operations in India.
Marketing & Branding: A significant expenditure is needed for marketing
and branding to increase traffic and sales on an e-commerce website. This is a
substantial expense that can be computed as cost per sale or cost per
acquisition.
Declining margins: Since other companies have already entered the Indian e-commerce
sector, customers are taken advantage of with significant discounts, offers,
deals, and simple return policies, among other things, which has led to low
margins.
Logistics & Delivery: Getting goods to customers remains a significant
challenge for any new online retailer. Remembering that the final delivery of
the product to the customer's door involves no middlemen makes E-Commerce
logistics distinct from traditional goods deliveries.
The final mile delivery of the product to the customer is
a crucial component of E-Commerce logistics. The inability of several
e-commerce businesses to provide last-mile delivery caused them to collapse.
The logistics for e-commerce might be owned or outsourced.
Touch and Feel: Indian
consumers have a more conventional mindset and feel more at ease purchasing
goods from physical establishments than online retailers. E-commerce businesses
that sell goods like clothing, jewellery, and handicrafts must contend with
obstacles in the sales process since consumers prefer to see, touch, and feel
items before making a purchase.
The challenge of access: The adoption of e-commerce requires access to
enabling technologies and human capital that have received the relevant
training. High user charges and restricted access to communications
infrastructure, however, may act as a barrier. Even in nations with highly
developed infrastructure, access costs impede the growth of e-commerce. The
severity of this issue is higher in less developed countries.
Security versus privacy: Online marketplaces' global reach raises concerns
about consumer protection and privacy. Different nations have different ideas
on how to uphold peoples' rights to privacy. The emergence of technology that
facilitates client tracking and profiling prompts inquiries regarding the
handling and commercialising of information gathered via online platforms.
Information collected electronically can be matched, aggregated, and mined to
uncover the traits and behaviours of people or groups. Concerns about using
cookies and other technologies that monitor a user's online activity have
arisen.[4]
Touch and Feel Factors: Indian consumers feel more at ease making in-person
product purchases. They typically chose the goods by holding them in their
hands. As a result, Indian consumers are more likely to purchase tickets and
make reservations online for electronics, books, and travel. Businesses that
deal in goods like clothing, jewellery, and handicrafts must overcome obstacles
in their sales strategy because consumers prefer to see and touch items before
purchasing.
Incorrect postal address: The customer will receive a call from the business
inquiring about his location after placing an online order. Because there is
always some standardization when writing post addresses, the address provided
needs to be more. It is also one of the main obstacles India's e-commerce must
overcome.
Shipping Challenges: Poor supply chain integration, expensive product
delivery fees, delivery delays, and, in certain places, inadequate courier
services further irritate customers.[5]
Fake websites: One
of the biggest problems facing the e-commerce sector is fake websites. Although
they appear to be authentic e-commerce websites, fake websites are frauds.
False websites can offer counterfeit goods and steal the financial and personal
information of their users.
Fraud: Fraud
can significantly affect consumers and e-commerce companies alike. Fraudulent
purchases can cost e-commerce enterprises money, and credit card issuers may
charge them chargeback costs. Consumers who fall prey to fraud risk losing
money, having their credit cards stolen, and getting faulty or counterfeit
goods.
Less negotiation and discounts: Online retailers hardly provide discounts, and
haggling is impossible.
Returns and Refunds for Products: Customers often exchange or return products that
they are not happy with. This is yet another serious problem that contributes
to overall revenue losses, shipping cost losses, and reputational damage.
Infrastructure Issues: The Internet serves as the foundation for
e-commerce. Compared to several Western countries, Internet penetration in
India is still relatively low. Poor connectivity quality exists in many areas,
a significant obstacle to e-commerce.
Absence of Cyber regulations: Another significant issue affecting E-Commerce is
the need for rules governing online transactions.[6]
Legal framework and issues
E- contracts:
The
Indian Contract Act, 1872 (“ICA”) and the Information Technology Act, 2000 both
regulate e-contracts in India. These rules specify that voluntary permission
and legal consideration between consenting adults are necessary for an
e-contract to be enforceable. Electronic evidence is also recognized by the
Evidence Act. Businesses that need to make sure that contracts are signed by
adults face a dilemma because the internet environment makes it more likely for
minors to enter into agreements. Since e-contracts do not yet require stamp duty
payment, the stamping of contracts, which is a requirement for physical papers,
becomes problematic. This may alter in the future for e-contracts, though,
given the availability of e-stamp sheets and the potential for online stamp
duty payments.
Data protection:
In India, concern over online transaction security and
safeguarding sensitive personal data is addressed through the Information
Technology Act's Section 43A, which mandates "reasonable security
practices" for protecting identifiable personal information. Sensitive
data, encompassing passwords, financial details, and health records, requires
strict security procedures, consent, and a privacy policy for organizations
collecting such information. Additionally, technologies like NEFT, RTGS, and EFT
bolster transaction security, overseen by the RBI under the Payment and
Settlement Systems Act of 2007. The IT Act, along with amendments and RBI
guidelines, establishes a framework for cybersecurity measures, introducing
stricter authentication for online transactions and liability for safeguarding
personal data.
Intellectual property rights:
Online
media presents a plethora of opportunities for trademark, copyright, and patent
infringement. E-commerce websites are established and designed by outside
parties, and frequently, outside companies also provide the content. If the
parties' agreements do not expressly provide IP rights, there may be major
problems with IPR ownership. Valid permissions should be in place before using
any third-party intellectual property. The disclaimer and IPR policy for
interactive websites should make these points very apparent, and the companies
who offer the goods and services should routinely monitor how their websites
are being used. Trade marks protect domain names, and conflicts may arise from
confusingly similar domain names.[7]
Effective
supply chain, efficient delivery system, and service management:
In e-commerce, it's critical to keep consumer protection
concerns in mind continually. There are no particular rules about internet
transactions under the Consumer Protection Act of 1986 ("CPA"), which
regulates relationships between customers and suppliers of products and
services. When a "deficiency in service", "defect in
goods", or an "unfair trade practice" occurs, a provider of
goods or services becomes liable. The CPA expressly states that any services
provided for free are not included in its purview. Thus, under the CPA, users
will be regarded as customers if the internet medium is only used for the
transaction.
Findings, conclusion and suggestions
Poor
internet penetration and connectivity, especially in rural areas, is a major
obstacle for e-commerce growth. Additionally, the lack of standardized postal
addresses and reliable logistics networks can make it difficult to deliver
products to customers. The majority of Indians still prefer to pay with cash on
delivery (COD), which can be expensive and ineffective for e-commerce
companies. Online payment methods are further restricted by the low credit card
usage rate.
Because
they are worried about fraud, security, and the quality of the products, many
Indian consumers are still reluctant to shop online.
India's
e-commerce industry is highly competitive, with local and foreign businesses
fighting for market dominance. It may be challenging for small enterprises to
compete as a result. The e-commerce industry in India is still evolving, and
there is a lack of clear and comprehensive regulations.
In
conclusion, several obstacles prevent the Indian e-commerce sector from growing
and operating smoothly. Businesses face uncertainty due to regulatory barriers
resulting from constantly changing laws, and concerns over fair competition are
raised by a small number of significant firms' dominance in the market.
Bottlenecks in the infrastructure and logistics, especially in remote places,
make operations less efficient. Concerns about data security and privacy are
still urgent, made worse by the growth of fraud and fake goods. The Indian
e-commerce ecosystem is further complicated by the need to maintain customer
trust, navigate the competitive scene, and ensure environmental sustainability.
Collaboration
between government agencies, regulatory entities, and industry players is
crucial to addressing these issues. In addition to addressing concerns of
market dominance, policymakers should work toward more transparent and stable
regulatory frameworks that promote fair market competition. Investing in solid
infrastructure and logistics can increase the effectiveness and reach of
e-commerce operations, particularly in rural areas. To safeguard customer
information and foster confidence, data privacy regulations and cybersecurity
protocols must be constantly improved and strictly enforced. E-commerce sites
should give priority to authentication techniques and have robust security
measures in place to thwart fraud and fake goods.
Additionally, by encouraging innovation in last-mile
delivery methods, eco-friendly packaging, and ecologically friendly business
practices, the environmental impact of the e-commerce industry can be lessened.
Promoting e-commerce technology education and skill development, especially in
rural regions, can empower a workforce that is more skilled and varied.
Ultimately, increasing customer confidence and expanding the Indian e-commerce
business can be achieved by fostering digital literacy among consumers and
guaranteeing easy, safe online transactions. The Indian e-commerce sector may
create a more favourable and vibrant environment for long-term growth and
innovation by tackling these issues as a group.
References:
1.
Archana Srivastava, Challenge for
E-Commerce in India, Vol. 6 Issue 1, Asian Journal of Technology &
Management Research.
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Commerce, (2018).
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&Anshu, Issues and Challenges of E-Commerce in India, volume 24
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[1] Archana Srivastava, Challenge for E-Commerce in India, Vol.
6 Issue 1, Asian Journal of Technology & Management Research, (2018).
[2] Megala, K., Challenges of E-Commerce in India, vol. 6, no.
S1Shanlax International Journal of
Commerce, (2018).
[3] Pratibha Bhardwaj &Anshu, Issues and Challenges of
E-Commerce in India, volume 24 issue 4, Think India journal, (2015)
[4] Buckley, Patricia,
and Sabrina Montes, The Promise and Challenge of E-Commerce, vol. 1, no.
2 Georgetown Journal of International Affairs, (2000),
[5] Subhash Masanappa Suryawanshi, E- Commerce in India - Challenges
and Opportunities E- Commerce, Vol. 3, Issue 3, International research
journal on multidisciplinary studies, (2017).
[6] Monika Kataria, E- commerce: opportunities and challenges in
India, Vol. 08, No. 04, - Journal of Modern Management &
Entrepreneurship, (2018).
[7] Harish Kumari, Commerce in India-Challenges and Legal Issues,
VOL. 2(1), International Journal of Business Management, (2015).
Article Information
ISSUES AND CHALLENGES FACED BY THE E-COMMERCE INDUSTRY IN INDIA
Authors: POOJA N HATYAL, CHRISTABELL JOSEPH
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/05
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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