E-tailing in India

7/21/2019 E-tailing in India

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SUMMER INTERNSHIP PROJECT REPORT

ON

E-tailing in India

Submitted In Partial Fulfillment of BB !"#$-#%

To

mit& 'lobal Bu(ine(( S)*ool+ *medabad

Submitted By:

Shivam Gupta

Enrollment Number:

308064103015

Submitted By:

Faulty Guide: !r"

#allavi $ittal



%

Fa)ult& )ertifi)ate

&hi' i' to erti(y that the pro)et entitled *E-tailing in India+ 'ubmitted by Shivam

Gupta ,Enroll No" -308064103015. a' a partial (ul(illment (or the re/uirement o(

BB- our'e at -mity Global Bu'ine'' Shool -hmedabad i' arried out under my

'upervi'ion and uidane" &he (at' are true to the be't o( my 2nolede"

,r Palla.i Mittal



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,e)laration Certifi)ate from t*e (tudent

hereby delare that the pro)et or2 entitled /E-tailing in India+ 'ubmitted to

mit& 'lobal bu(ine(( S)*ool-*medabad i' a reord o( an oriinal or2 done by

me under the uidane o( !r" #allavi $ittal"

, .

Shivam Gupta

-30806413015



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)0no1ledgement

ta2e thi' opportunity to epre'' my pro(ound ratitude and deep reard' to my uide

#ro(e''or #allavi $ittal (or her eemplary uidane and monitorin throuhout the

our'e o( thi' report"

Shivam upta



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Inde2

Table of Contents

b(tra)t %

C*a3ter # Introdu)tion 4

C*a3ter ! T*eoreti)al ba)0ground of t*e (tud& #%

C*a3ter $ Re(ear)* met*odolog& !5

3"1e'earh de'in

3"% Samplin

3"3 $ethod o( data olletion3"4 Sope o( 'tudy

3"5 7imitation' o( the 'tudy

C*a3ter 5 ,ata anal&(i( and inter3retation !6

C*a3ter 6 Con)lu(ion( !%

Referen)e( !7



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b(tra)t

&he ndian nline etail i' a rih 'ement aitin to be eploited" nternet i' a potent

medium that an 'erve a' a uni/ue plat(orm (or the roth o( retail brand' in ndia"

&he medium hold' many virtue' (avorable (or the retail indu'try inludin a hiher

u'tomer penetration9 inrea'ed vi'ibility9 and onvenient operation'" &he urrent

ebba'ed model' (or etailin are part o( an embryoni pha'e preedin an era o(

rapid tran'(ormation9 hallene9 and opportunity in ndian retail mar2et" &he ndian

retail mar2et i' itne''in a revolution" &he roth o( internet ha' enabled the ne

retail (ormat o( the virtual retailer to emere and (ored the ei'tin retailer' to

on'ider etailin model o( retailin a' ell" nline re tailing or etailin i' de'ribed

a' tran'ation' that are onduted throuh interative online omputer 'y'tem'9 hih

lin2 on'umer' ith 'eller' eletronially9 here the buyer and merhant are not at the

'ame phy'ial loation" n a 'hort 'pae o( time9 internet retailing or etailin ha'

(irmly e'tabli'hed it'el( a' a viable alternative to 'tore ba'ed 'hoppin"



C*a3ter #

Introdu)tion

;ith rapid roth o( the nternet and lobali<ation o( mar2et9 the retail 'etor ha'

beome an inrea'inly ompetitive and dynami bu'ine'' environment" Bu'ine'' and

mar2etin ativitie' are a((eted by the invent o( nternet tehnoloie' and the nternet

i' revolutioni<in ommere9 mar2etin9 retailin9 'hoppin and adverti'in ativitie'

o( produt' and 'ervie'" &here are 'everal attrative attribute' o( nternet to not only

eu'tomer' but al'o ompanie' on time and money 'avin9 ommuniate9

onveniene9 ea'y ae''ibility9 'eletion (rom a ide rane o( alternative'9 and the

availability o( in(ormation (or ma2in dei'ion' and all mar2etin ativitie' an be

per(ormed via the nternet e((iiently" n the era o( lobali<ation9 ompanie' are u'in

the nternet tehnoloie' to reah out to valued u'tomer' and to provide a point o(

ontat %4 hour' a day9 day' a ee2" Etailin and emar2etin are the to

important term' in the ne nternetba'ed bu'ine'' domain" Etailin an be de(ined

a' a ay o( ondutin bu'ine'' by ompanie' and u'tomer' per(ormin eletroni

tran'ation' throuh the nternet"

Etailin ,le'' (re/uently: etailing . i' the 'ellin o( retail ood' on the nternet" Short

(or =eletroni retailin9= and u'ed in nternet di'u''ion' a' early a' 1>>59 the term

'eem' an almo't inevitable addition to email9 ebu'ine''9 and eommere" Etailin

i' 'ynonymou' ith bu'ine''toon'umer ,B%?. tran'ation"

Etailin ha' re'ulted in the development o( etailare 'o(tare tool' (or reatin

online atalo' and manain the bu'ine'' onneted ith doin etailin" - ne

trend i' the prie ompari'on 'ite that an /ui2ly ompare prie' (rom a number o(

di((erent etailer' and lin2 you to them"



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Ho1 an e-tailing (ite 1or0(

Normally a u'er ill et to 2no about an online 'hoppin eb 'ite throuh many

ay'9 mo't (re/uently all online u'er' ill (ind eb'ite' on the o by u'in Goole'earh or any other 'earh enine'"

;hen they 'ee the eb 'ite in(ormation lin29 they li2 to it9 omplete the eb'ite

rei'tration proe'' i( any9 hoo'e the produt' they are intere'ted9 ompare 'imilar

produt' 'pei(iation o't et"9 and on(irm the item' 'eleted and (inali<e the

invoie and ma2e payment via their debit ard @ redit ard ban2 aount or via #ay

#al or Goole he2out"

ne the payment i' reeived the merhant ill reeive the payment9 'tart proe''in

the order9 and 'hip the produt to the u'erA' delivery @ 'hippin addre''"

Further i( the produt i' arryin arranty9 po't'ale' 'upport and 'ervie 'hould be

(ailitated to the u'tomer in order to reate ood ord o( mouth and et a ood

returnin u'tomer ba'e hih i' the 2ey 'ue'' (ator (or the eetailer"

1" nline vi'itor o( the 'ite ill pi2 up the item' to be purha'ed"

%" ?on(irmin @ (inali<in the item li't 'eleted and he2out"

3" Enter the redit @ debit ard @ #ay #al in(ormation to ma2e the payment"

4" 'er payment in(ormation i' ettin he2ed ith ban2er via payment ateay and

one itA' authentiated"

5" &he payment ill be redited to retailer aount and an rder on(irmation i'

'hon to the vi'itor alon ith order detail' and 'hippin in(ormation"

&he vi'itor ill al'o be noti(ied on the purha'e made via email"

&he vi'itor ill be able to tra2 their order 'tatu' and an S$S @ email update ill be

(re/uently 'ent to vi'itor on the produt or 'ervie delivery"



>

Im3ortan)e of e-tailing to gro1 in India

'enerate em3lo&ment

EtailinA' employment potential9 hih i' rarely di'u''ed beau'e o( it' urrent 'i<e

and 'ale9 entail' to dimen'ion' the ab'olute volume o( employment9 and the

attrativene'' o( etailin a' a de'tination (or hih /uality talent" Etailin ha' the

potential to enerate diret employment (or nearly 1"45 million people by %0%1

Employment in loi'ti' i' pre'ently enerated by third party loi'ti' ,3#7.

provider' ho are enaed in order deliverie'9 and9 in 'ome a'e'9 ith etailer' hohave inhou'e la't mile delivery eperti'e" Coever9 the'e are 'everely limited in

term' o( apabilitie' and 'ale" ;ith the roth o( etailin to the pro)eted 'i<e o(

S! 6 billion by %0%19 the loi'ti' indu'try ill itne'' the emerene o( player'

ith 'ale" &o tap thi' opportunity9 'ome o( the ei'tin player' may ro in 'i<e9

hile other e'tabli'hed loi'ti' 'olution provider' may tea2 their bu'ine'' model'"

$any ne player' may al'o emere" n either a'e9 the 'purt o( etailin ill all (or

delivery apabilitie' that ill in turn re/uire the deployment o( a va't number o( (eet

on the round9 reatin a potential 0"8 million )ob' by %0%1"

;arehou'in )ob' demand the deployment o( people in order proe''in enter' that

are enaed in the (untion o( interatin order' (rom variou' vendor' ith order'

reeived (rom the u'tomer'" rder' are reeived (rom a lare ba'e o( u'tomer' in

'mall unit' ,typial ba'2et 'i<e o( 1%." Coever9 order' are plaed ith a lare

number o( vendor' in hih volume'" n 'ome a'e'9 order' are direted to vendor'

ho 'hip the produt' diretly to the u'tomer" &hi' i' a hih prei'ion proe'' that

re/uire' order pi2in and proe''in apabilitie' ith minimal room (or error"

n mature etailin mar2et'9 thi' (untion i' arried out by (ul(illment enter'" &he'e

enter' are nearly %509000 '/" (t" in 'i<e and re'emble a (atoryli2e 'etup o( omple

a''embly line'" -n averae (ul(illment enter or arehou'e in the

S employA' 800 to 1800 or2er' durin nonpea2 time' hih an inrea'e by 50D

or more durin the pea2 period"



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ndia urrently la2' thi' apability" ?urrently9 the 'y'tem i' improvi'ed by etailer' to

meet the immediate demand" ( etailin in ndia ha' to ro to the pro)eted 'i<e9 it

ill re/uire ma''ive arehou'in and order proe''in apabilitie'"

&here ill9 hoever9 be one di((erene in thi' apability eneration ndia may not

ta2e a hihend tehnoloy adoption route due to it' relative advantae in term' o(

labor o't'" &hi' (untion ill there(ore have the potential to enerate employment (or

nearly 0"%5 million people by %0%1"

&ehnoloy )ob' (or etailer' re/uire a lare number o( tehnial epert' that are

primarily deployed in three (untion':

a" !evelopin improvin the etailer' online inter(ae in order to enhane u'tomer

eperiene on the eb portal

b" !evelopin proprietary alorithm' to inrea'e online tra((i ,i"e" more u'tomer'

vi'it the eb'ite. and improve onver'ion ,more u'tomer' buy on the 'ite.9 and al'o

mea'urin and analy<in on'umer behavior (or proative taretin

" Buildin in more e((iieny and ontrol in the 'upply hain

n mature etailin mar2et'9 the'e tehnoloyrelated (untion' have evolved to 'uh

hih level' o( ompleity that many etailin ompanie' vie them'elve' a'

'peiali't' in eb tehnoloy and analyti'" t i' not 'urpri'in then that9 even ith

the 'mall urrent 'i<e o( etailin in ndia9 the indu'try ha' manaed to attrat the be't

enineerin and manaement brain'" &he etailin mar2et ill emere a' a de'tination

(or hihly'2illed tehnoloy )ob' employin nearly 0"3 million people by %0%1"

Be'ide' the above (untion'9 etailin ill re/uire employee' in 'everal other role'

li2e u'tomer are9 merhandi'in9 vendor manaement9 and ontent development9 a'

ell a' in reular orporate (untion' li2e C9 (inane aount'9 admini'tration9

et" &he'e ill add nearly 0"1 million employee' to the or2(ore by %0%1"

ndiaA' eduation 'y'tem ill need to reate a va't pool o( people ho ill brin to

the'e etailer' and their 'ervie provider' the re/ui'ite '2ill'9 hih may vary (rom the

hihly reative to the hihly tehnial" &he urrent 'i<e o( etailin9 hoever9 neither

enerate' tration (or thi' talent in lare number' nor ill it prompt the development

o( etailin(ou'ed urriulum' and our'e'" nle'' etailin ro' to a 'i<eable

'ale9 it' eo'y'tem ill not proli(erate to a ritial ma'' that an beome an attrative

employment de'tination (or the'e '2ill'" For in'tane9 today9 the 'imple need o(

reatin a vernaular eb'ite9 i"e" one u'tomi<ed to the loal dialet9 i' on'trained

by the la2 o( apable ontent ritin 'ervie provider'"



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Facilitate growth of allied industries

Etailin beome' a viable bu'ine'' model hen it e((iiently enerate' demand9

'oure' produt' (rom vendor'9 and deliver' them to on'umer'" ?oneptually9 thi' i'

not very di((erent (rom traditional bri2 mortar retailin" Coever9 unli2e bri2

mortar retailin9 etailin doe' not re/uire the openin o( phy'ial 'tore' to apture

on'umer demand"

n'tead9 it need' an e((etive and in'pirin eb'ite throuh hih u'tomer' an

ae'' produt in(ormation and plae order'" &hi' re/uire' the omin toether o(

many 'ta2eholder' 'o that the eb'ite 'tand' out amid the rod o( the

nternet9 antiipate' u'tomer need' to di'play the riht produt'9 and hold' the

u'tomerA' imaination all the ay to a purha'e" ne the order i' plaed9 it pa''e'

throuh another 'et o( 'ta2eholder' ho brin the ordered produt to the u'tomerA'

door'tep" $o't etailer' there(ore vie them'elve' a' 'upply hain and tehnoloy

interator' ho manae a omple eb o( many 'ta2eholder' ,be'ide' diret

employee'.9 eah o( hom brin' in 'peiali't '2ill' and role' to the etailin proe''

primarily dependent on the tra)etory o( etailinA' roth" &here(ore9 the notion that

etailinA' roth ill reate an ine/uitable revenue 'hare in (avor o( the etailer i'

not true" n the ontrary9 the roth o( etailin ill enable the roth o( the'e allied

indu'trie' and (untion'"

Cere it i' important to hihliht the interdependene o( the evolution o( the loi'ti'

indu'try on etailinA' roth and viever'a" 7oi'ti' 'olution' (or etailin demand

the reation o( the apability to 'ervie order' diretly to u'tomer'"

t re/uire' entral arehou'in apabilitie' in order to reeive merhandi'e in bul2

(rom the vendor'9 and pi2 up and proe'' thi' merhandi'e a' individual order'"

Given the eoraphial ompleity9 'uboptimal in(ra'truture and reulatory

variation' aro'' the ountry9 loi'ti' in ndia ha' alay' been hallenin" t ha'

al'o been more o( a B%B 'ervie9 ith the re'ult that the B%? loi'ti' eo'y'tem9

hih re/uire' u'tomer interation9 a'h handlin ,a'hondelivery bein 5060D

o( all deliverie'.9 and return' handlin9 i' 'till a ne and underdeveloped apability

(or third party loi'ti' ,3#7. provider'"

Some o( the more e'tabli'hed etailer' have inve'ted in 'ettin up their on la't mile

delivery netor2'9 hih i' the only tanibleA u'tomer interation9 and al'o beau'e



1%

mo't 3#7 player' are 'till in the proe'' o( developin e((iient -nd omprehen'ive

loi'ti' netor2'"

&hi' i' hoever hanin" $any 3#7 provider' are no eared up to 'ervie etailin

lient' and buildin dediated vertial' (or thi' purpo'e hile many other' are (a't

addin the apabilitie' re/uired (or thi' 'etor" $any ne etailin (ou'ed player'

have emered" Some etailer' are tran'itionin their loi'ti' arm' into 'ervie

provider' (or other etailer' a' ell" &hi' move i' the outome o( nee''ity9 iven the

la2 o( viable alternative'" deally9 etailer' ill be more than happy to out'oure la't

mile delivery to a 'peiali't vi<" a 3#7 provider" &hi' 'etor ha' the potential to

bene(it by

S! 5 billion annually by %0%1"

t i' intere'tin to envi'ae a role (or ndia #o't in the la't mile delivery" ndia ha'

%1000 pin ode'9 and mo't 3#7 player' are able to reah about 800010000 pin ode'

at be't" ndia #o't9 ith it' (ormidable netor2 aro'' urban and rural ndia9 and it'

already e'tabli'hed mehani'm to handle money order'9 an harne'' thi' opportunity

in a bi ay"

eent media report' indiate that it already ha' it' eye' on thi' emerin 'pae"

nternationally9 a'e 'tudie' o( the S #o'tal Servie ,S. and !eut'he #o't

,Germany. demon'trate that the'e orani<ation' have attempted to remain relevant in

the hanin time' by tappin into and bene(ittin (rom the roth o( etailin in

their re'petive ountrie'" Both the'e orani<ation' are 'ini(iant player' in

deliverin parel' to etailin u'tomer'"

- 'imilar interdependene 'hould be eplored beteen the roth o( etailin and

bene(it' to other indu'trie' li2e dome'ti air aro9 teleom9 and ban2in"

Promote entre3reneur(*i3

ne o( the mo't 'ue''(ul arument' in (avor o( etailinA' bu'ine'' model i' it'

ability to boo't entrepreneur'hip"

$any o( todayA' leadin etailin bu'ine''e' ere 'tartup' a (e year' ao" &hi'

trend ontinue' a' more and more name' )oin thi' li't" Coever9 it i' a le'' tal2ed

about (at that the roth o( etailin reate' enablin ondition' (or entrepreneur'hip



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aro'' the entire etailin value hain" Etailin ill po'itively impat the

development o( entrepreneur'hip in ndia in to ay':

a" t ill provide ea'y ae'' to on'umer mar2et' ,ne and ei'tin.9 hih ill

enable the roth o( merhandi'e vendor'

b. t ill open up opportunitie' (or entrepreneur' to beome 'ervie provider' to the e

tailin bu'ine''

a. Easy Access to Consumer Markets&he roth o( etailin ill re'ult in the emerene o( tremendou' opportunitie' (or

merhandi'e vendor' to eplore ne on'umer mar2et'9 both dome'ti and

international9 and al'o ahieve 'ale" &hi' ill not only attrat ei'tin vendor' to e

tailin but it ill al'o itne'' the reation o( ne bu'ine''e' that ill ant to tap thi'

opportunity"

ndia i' a ba'e (or many vendor' that 'ervie orldrenoned brand' and retailer'"

&he ountry i' al'o a ba'e (or proprietary and ethni merhandi'e produt' that have a

va't lobal appeal" Coever9 ei'tin 'truture' and tran'ation o't' do not allo

the'e vendor' to (ully eplore dome'ti and lobal opportunitie'"

Etailin an emere a' an enablin plat(orm (or vendor' to tap 'uh opportunitie' a'

ro'' border tieup' hih either leverae etailinA' reah to ae'' reional mar2et'9

reah out to leadin etailer' (or vendor opportunitie'9 or launh on etailin route'

and diretly reah out to u'tomer'" Suh a rane o( po''ibilitie' an prove to be a

boon to the po2et' o( numerou' loal arti'an' ho ma2e a myriad o( produt'

ranin (rom (a'hion ear to home improvement

Suh opportunitie' ill not only 'pur the demand (or an inrea'ed vendor ba'e but

ill al'o ataly<e the deployment o( apital re/uired to inrea'e the apabilitie'

needed to 'ervie thi' demand"

&he mention o( an online ndian ethni ear player i' merited to 'upport thi'

arument" n it' ten yearlon )ourney9 thi' ndiaba'ed player ha' manaed to build a

'ue''(ul etailin bu'ine'' that (ou'e' on None'ident ndian' ,N'.9 i"e" ndian

oriin people livin out'ide ndia" &he player proure' and u'tomi<e' ethni ear (or

omen and men (rom over a 1000 vendor'9 and 'ell' the'e produt' diretly to

u'tomer'" &he bu'ine'' earn' (orein ehane9 i' under'tood to be pro(itable9 and

ha' 'ue''(ully reated a mar2et ith diret ae'' to N' in over 30 ountrie'" -n

evolved etailin bu'ine'' environment an thu' 'erve a' a 'tron ataly't (or



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merhandi'e vendor' to eplore many 'uh direttou'tomer lobal opportunitie' in

a number o( ay'"

b. Create opportunities to build new capabilities as service

providers;hile 'ome etailin intervention' are 'imilar to tho'e o( bri2 mortar retail9 the

2ey di((erene (or an etailer lie' in the tehnoloy9 mar2etin9 pa2ain9 and

loi'ti' intervention'"

;e have already hihlihted ho etailin i' leadin to the emerene o( neer

player' in the loi'ti' 'pae" &he roth o( etailin al'o reate' numerou'

opportunitie' (or entrepreneur'hip in the tehnoloy9 pa2ain9 and mar2etin

domain'" n many in'tane'9 etailer' re/uire the'e (untion' to provide very 'pei(i

and nearly u'tomi<ed 'olution'9 hih may la2 'ale and thu' not attrat bi 'ervie

provider'" &hen aain9 there are a'e' herein vendor' 'imply donAt ei't to ater to

'uh need'" &here(ore9 many (reelaner'9 'tartup' and 'mall enterpri'e' move in early

to leverae thi' opportunity" &hi' 'enario ha' (uelled the 'tartup ulture around e

tailin in mature mar2et'"

- 'imilar 'enario ill play out in ndiaH by %0%19 'uh (irm'9 'mall enterpri'e'9 and

(reelaner' ill have the potential to earn S! "5 billion annually by providin

'ervie' to etailin bu'ine''e'" &he pro(ile' o( 'uh entrepreneurial venture' ill be

a' diver'e a' the 'ervie' they provide9 and they ill re/uire 'peiali<ed '2ill' ranin

(rom reative ritin to 'tati'ti'"

Redu)e tran(a)tion )o(t

ne o( the bie't advantae' o( etailinA' bu'ine'' model i' it' inrained ability to

redue tran'ation o't'" &ran'ation o't' here re(er to the o't' inurred in ma2in

an eonomi ehane9 hih9 in retailin9 involve three element':

I ?o't o( di'tribution o( ood'

I 'e o( leverae ,redit. in the 'upply hain

I ,n.ertainty o( ta reeipt'

etailin in ndia involve' hih tran'ation o't'" $ar2et 'truture and in(ra'truture

inade/uaie' are the 2ey rea'on' (or thi' hih o't" - normal retail tran'ation in ndia

involve' the movement o( ood' throuh a multilayered di'tribution 'y'tem (rom the

produer@manu(aturer to the u'tomer" &he'e layer' o( the di'tribution 'y'tem entail



15

di'tributor'9 hole'aler'9 dealer'9 et" ho 'it aro'' eoraphie' in a layered

hierarhy" &here are three hallene' ith 'uh a 'truture"

&he (ir't hallene i' that eah layer o( di'tribution add' an etra o't in ma2in the

ood' reah the (inal on'umer" n thi' proe''9 thi' 'truture ma2e' the prie o( the

ood' hiher (or both the on'umer and the manu(aturer ,due to a (ied prie

reime."

&he 'eond hallene i' the ei'tene o( redit in the 'y'tem hih 'train' the

or2in apital o( all 'ta2eholder'" $any a time'9 the layer' in the 'y'tem primarily

at a' (inaner' to (ailitate the movement o( ood' (rom manu(aturer' to on'umer'"

ne 2ey rea'on (or the pre'ene o( 'uh an arranement i' the la beteen the time o(

'ale at the u'tomer end and the time the manu(aturer beome' aare o( it"

&he third hallene i' that mo't retail tran'ation' at point o( 'ale are in a'h" &hi'

reate' a leeay in the 'y'tem (or ta lea2ae'9 vi<" underinvoiin9 underreportae

o( 'ale'9 et"

&he pro)eted roth o( etailin in ndia ill 'ue''(ully addre'' all the three

hallene'" &he o't o( di'tribution ill redue beau'e the multilayered di'tribution

'y'tem ill be replaed by an order (ul(illment proe'' arraned in a hub and 'po2e

model" &he layer' o( di'tributor' ill not be re/uired here a' thi' role ill be (ul(illed

by arehou'in and loi'ti' operation' hih o((er marin enhanement

opportunitie' (or manu(aturer' and better prie' (or on'umer'"

-ain9 iven that etailin i' made po''ible by the eletroni medium o( the nternet9

the immediate reordin o( point o( 'ale data and payment reeipt'9 and the ab'ene

o( intermediarie' in etailin hain allo' 'moother and (a'ter (lo o( money and

in(ormation (rom the u'tomer to the etailer and 'ub'e/uently to the manu(aturer"

&hi' ha' the potential to dra'tially improve the manu(aturer' and the etailer' ability

to manae bu'ine'' ith le''er or2in apital and redue' the redit level' in the

'y'tem"

Finally9 etailinA' bu'ine'' model provide' a tran'parent retailin environment (or

both the u'tomer and the etailer"

Etailin provide' an eletroni point o( 'ale that reord' 'ale' and thereby reate' a

ertainty in the 'y'tem about the atual volume@value o( 'ale'" Even i( the u'tomer

deide' to pay in a'h ,i"e" throuh a'hondelivery.9 thi' eliminate' any 'enario' o(

underinvoiin and underreportae" -n epliit advantae o( thi' 'y'tem i' that it



16

inrea'e' the ertainty o( ta reeipt' ,i"e" o( J-&9 ?S&9 et"." Suh ta olletion' are

pro)eted to be S!

"6 billion in %0%1"

C*a3ter !

T*eoreti)al ba)0ground of t*e (tud&

Etailin9 ith it' uni/ue ompetitive advantae i' ta2in more and more mar2et

'hare' (rom the traditional retailer indu'try" &he (re/ueny o( u'tomer' oin to

'hoppin mall'9 and the averae time u'tomer' are 'pendin in mall' i' droppin"

?on'umerA' dei'ionma2in proe'' ha' on'iderably haned ith the introdution

o( the nternet a' an alternative hannel (or 'hoppin" &he ne ave o( on'umeri'm

oupled ith inrea'in urbani<ation and bureonin middle la'' ith paradim

'hi(t' in their demoraphi and p'yhoraphi dynami' have driven on'umer'

(re/uently to u'e retail eb'ite' to 'earh (or produt in(ormation and@or ma2e a

purha'e o( produt'" n ndia9 the 'hi(t (rom phy'ial 'tore' to e'tore ta2e' plae due

to the inade/uay o( time o( on'umer' and the relatively hih di'po'able inome' a'

ell a' due to a hih need (or labor'avin ood' and 'ervie'"

- lare 'ement o( ndian on'umer' i' prie 'en'itive and alay' on the loo2out (or

ood barain'" $o't etailer' in ndia are tryin to a/uire on'umer' by o((erin

heavy di'ount' K o(ten belo the o't prie9 hih i' not 'u'tainable in the lon run"

&houh prie di'ountin9 diret or throuh bundlin9 deal'9 (la'h 'ale' et" ill

ontinue to be an important driver (or online purha'e9 there i' an inrea'in

reali<ation amon etailer' that thi' alone doe' not drive loyalty" &he hih u'tomer

a/ui'ition o'tA' ,hih i' above '"1000 per u'tomer (or many player'. imply that

eah u'tomer need' to tran'at at lea't 36 time' (or a player to )u'ti(y 'uh o't'"

;ith an inrea'ed bottomline (ou'9 'everal player' are tryin to move aay (rom

the loe't prieA propo'ition and tryin to inulate loyalty throuh other' (ator' too

li2e produt@ 'ervie o((erin'9 inter(ae eperiene9 e((iient (ul(ilment et" -lon

ith prie9 the'e ill beome important a' etailin mar2et mature'"



1

;ith inrea'in nternet penetration9 people are ettin entrenhed into the online

'pae9 and 'pendin a lot o( time on 'oial netor2in plat(orm'" Globally9 an

e'timated %5D o( the time 'pent by u'er' online i' on 'oial netor2'" &he number i'

e/ually hih in ndia at %%D"

?ompanie' aro'' the lobe are inrea'inly u'in the 'oial media plat(orm a' a

mar2etin tool and (ou'in on their 'oial media 'tratey to apitali<e on the

plat(ormA' 'trenth'9 vi<" hih on'umer tra((i9 diret ommuniation and lo o't'"

&he time i' not (ar hen on'umer' ill al'o inrea'inly tran'at throuh 'oial

netor2' ivin ri'e to 'oial ommere" &he phenomenon i' already in the early

'tae' o( development9 enablin people to onnet here they buy and buy here

they onnet'hoppin and 'oiali<in are onverin in the online orld too" &he

lobal 'oial ommere mar2et i' pro)eted to ro (rom S! 5 billion in %011 to

S! 30 billion by %015"

Etailin not only enable' ompanie' to reate vi'ibility and reah a ider on'umer

ba'e but al'o o((er' a better o't 'truture a' ompared to bri2andmortar retailer'"

Cene9 etailer' are able to pa'' on hiher prie di'ount' to on'umer'"

nline 'tore' vi'Lvi' phy'ial 'tore' have typially loer rental' and employee o't'

even thouh (ul(ilment o't' (or an etailer are hiher"

&hi' ma2e' the online hannel a threat to bri2 and mortar retailer'9 a((etin the

latterA' 'ale' lobally" &he e((et i' more pronouned in 'ome ateorie'9 e"" boo2'"

-' per the M Boo2'eller' -''oiation9 the ount o( independent boo2'hop' in M

ha' dropped (rom 1500 to 1100 beteen %006 and %011" Similarly9 in ndia9 the

boo2' ateory ha' 'een the emerene o( many online retailer'9 hih ha' a((eted

traditional boo2'eller' ith many o( them 'eein an e'timated %0%5D deline in their

'ale'"

ne o( the bie't advantae' o( etailinA' bu'ine'' model i' it' inrained ability to

redue tran'ation o't'" &ran'ation o't' here re(er to the o't' inurred in ma2in

an eonomi ehane9 hih9 in retailin9 involve three element':

I ?o't o( di'tribution o( ood'

I 'e o( leverae ,redit. in the 'upply hain

I ,n.ertainty o( ta reeipt'

etailin in ndia involve' hih tran'ation o't'" $ar2et 'truture and in(ra'truture

inade/uaie' are the 2ey rea'on' (or thi' hih o't" - normal retail tran'ation in ndia

involve' the movement o( ood' throuh a multilayered di'tribution 'y'tem (rom the



18

produer@manu(aturer to the u'tomer" &he'e layer' o( the di'tribution 'y'tem entail

di'tributor'9 hole'aler'9 dealer'9 et" ho 'it aro'' eoraphie' in a layered

hierarhy" &here are three hallene' ith 'uh a 'truture"

&he (ir't hallene i' that eah layer o( di'tribution add' an etra o't in ma2in the

ood' reah the (inal on'umer" n thi' proe''9 thi' 'truture ma2e' the prie o( the

ood' hiher (or both the on'umer and the manu(aturer ,due to a (ied prie

reime."

&he 'eond hallene i' the ei'tene o( redit in the 'y'tem hih 'train' the

or2in apital o( all 'ta2eholder'" $any a time'9 the layer' in the 'y'tem primarily

at a' (inaner' to (ailitate the movement o( ood' (rom manu(aturer' to on'umer'"

ne 2ey rea'on (or the pre'ene o( 'uh an arranement i' the la beteen the time o(

'ale at the u'tomer end and the time the manu(aturer beome' aare o( it"

&he third hallene i' that mo't retail tran'ation' at point o( 'ale are in a'h" &hi'

reate' a leeay in the 'y'tem (or ta lea2ae'9 vi<" underinvoiin9 underreportae

o( 'ale'9 et"

&he pro)eted roth o( etailin in ndia ill 'ue''(ully addre'' all the three

hallene'" &he o't o( di'tribution ill redue beau'e the multilayered di'tribution

'y'tem ill be replaed by an order (ul(illment proe'' arraned in a hub and 'po2e

model" &he layer' o( di'tributor' ill not be re/uired here a' thi' role ill be (ul(illed

by arehou'in and loi'ti' operation' hih o((er marin enhanement

opportunitie' (or manu(aturer' and better prie' (or on'umer'"

-ain9 iven that etailin i' made po''ible by the eletroni medium o( the nternet9

the immediate reordin o( point o( 'ale data and payment reeipt'9 and the ab'ene

o( intermediarie' in etailin hain allo' 'moother and (a'ter (lo o( money and

in(ormation (rom the u'tomer to the etailer and 'ub'e/uently to the manu(aturer"

&hi' ha' the potential to dra'tially improve the manu(aturer' and the etailer' ability

to manae bu'ine'' ith le''er or2in apital and redue' the redit level' in the

'y'tem"

Finally9 etailinA' bu'ine'' model provide' a tran'parent retailin environment (or

both the u'tomer and the etailer"

Etailin provide' an eletroni point o( 'ale that reord' 'ale' and thereby reate' a

ertainty in the 'y'tem about the atual volume@value o( 'ale'" Even i( the u'tomer

deide' to pay in a'h ,i"e" throuh a'hondelivery.9 thi' eliminate' any 'enario' o(



1>

underinvoiin and underreportae" -n epliit advantae o( thi' 'y'tem i' that it

inrea'e' the ertainty o( ta reeipt' ,i"e" o( J-&9 ?S&9 et"." Suh ta olletion' are

pro)eted to be S! "6 billion in %0%1"

Benefit( of e-tailing

Con.enien)e

Normally9 online 'tore' are u'ually available %4 hour' a day9 and many on'umer'

have internet ae'' both at or2 and at home"

Pri)e and (ele)tion

ne o( the bie't advantae' o( online 'hoppin i' to (ind out /ui2ly deal' (or item'

at 'ervie' ith many di((erent vendor'" Searh enine' 9 online prie ompari'on

'ervie' and di'overin 'hoppin item' an be u'ed to (ind out 'eller' (or a partiular

produt' or 'ervie'" Some retailer' al'o o((er (ree 'hippin on 'u((iiently lare

order'" Searhin an online ataloue an be (a'ter than bro'in the phy'ial

ataloue o( a bri2 and mortar 'tore"

Mar0et re(ear)*

etailer' an u'e their online pre'ene a' a tool to ain valuable u'tomer in(ormation

to (orea't (uture u'tomer demand" nline mar2et re'earh ha' 'ome poer(ul

advantae'9 'uh a' monitorin realtime buyin dei'ion'" n addition9 online

u'tomer' have the 2nolede and eperiene nee''ary to an'er the /ue'tion'9

hih produe' more aurate and reliable data"

Online )u(tomer (er.i)e

n ndia9 eb'ite' are beomin ne hannel' (or ondutin u'tomer 'ervieH there(ore

their eneral aeptane level ill inrea'e9 due to the bene(it' provided to u'tomer'" For

eample9 a u'tomer ould a'2 (or a produt introdution or a per'onali<ed produt in the

prepurha'e 'tae9 and ould al'o he2 the delivery 'tatu' online" -ll 'uh 'ervie' an

be available uninterrupted online9 hih i' almo't impo''ible in the phy'ial orld9 due

to the o't"

Promotional )*annel

- eb'ite an be u'ed a' a medium to ondut promotional eperiment'9 due to the

ide reah o( the internet9 and the lo o't" &here(ore9 it ill be a reat opportunity

(or ndian ompanie' to promote their bu'ine''e'"

Mar0eting tool







%%

Mea(ure( to im3ro.e e-tailing

Prom3t deli.er&

&he (ir't ma)or hallene (aed by eretailer' a' hih epetation' (or prompt

delivery o( ;eb order' by u'tomer'" ne o( 'everal delivery option' 'uh a'9 epre''

,net day.9 priority ,three to (our day'. and reular ,(ive to ten day'. may be 'eleted

and paid (or by the u'tomer hile orderin the produt"Su33l& )*ain

En'urin 'upply o( re/uired amount o( ra material' and produt' at the riht time (or

the riht prie a' ell a' proper 'lottin and pi2in method' are very muh important

(or e((etive operatin o( etailin" Eretailer' mu't have reliable 'upplyhain

partner' ith the 'upport o( a ba2 end 'upplyhain manaement 'y'tem'" #roper

'lottin and pi2in method' ba'ed on the 'i<e9 eiht and demand nature mu't be

devi'ed to reeive9 'lot9 pi2 and pa2 properly" - arehou'e manaement 'y'tem

'hould be a part o( the 'upply hain manaement 'y'tem to over'ee the ativitie' li2e

order 'ortin9 pa2in9 and (inal bar odin (or 'hipment"

,emand nature

Sue''(ul eretailin ompanie' ill have to a''e'' the 'upply and demand ondition

'o that they an meet unpreditable demand" - ne'orthy event an reate a hue

demand (or a produt ithin a 'hort time" Sea'onality (ator al'o ontribute' to the

unpreditability o( the demand nature" #opular item' may need to be a''e''ed on it'

(uture demand to avoid proe''in delay'" #roper u'e o( 'ea'onality (ator' in

(orea'tin model' may ontribute to better demand (orea'tin (or hihly

unpreditable item'"

Re.er(e logi(ti)(

n any retail bu'ine''9 'ome produt' are returned (rom the point o( on'umption"

&here(ore9 the hallene i' 'ettin up in(ra'truture and proedure' (or rever'e

loi'ti'" &he proe'' i' not only inevitable but al'o ainin importane a' a viable9

'u'tainable and pro(itable bu'ine'' 'tratey" #roedure' need to be e'tabli'hed (or

returnin order'" !ropo(( point' mu't al'o be 'et up" - u'tomer antin to return



%3

merhandi'e 'hould be enouraed to have authori<ation to do 'o throuh the ;eb

'ite" &he etailor' need to have an under'tandable produt return poliy on the ;eb" -

opy o( the 'ame poliy may al'o be inluded in the 'hipped pa2ae" - u'tomer

mu't identi(y the rea'on (or returnin the item" Ba'ed on the rea'on9 one o( 'everal

ation' 'uh a' re'to2'9 reyle9 remanu(ature9 and 'end ba2 to the 'upplier may be

ta2en" - (leible 'ortin or pa2ain line in the arehou'e may be u'ed to handle

returned item' hen needed"

))ura)&

&o ahieve hih level' o( auray in etailin bu'ine''9 the (irm mu't on'ider the

riht e/uipment to inrea'e auray" &hi' ill aument the nature o( it' operation'9

and the level o( ad)u'tment that manaer' are illin to ma2e to minimi<e human

error'" But i( ompanie' ather and analy<e arehou'e per(ormane 'tati'ti'

reularly9 inve't in automated data olletion and veri(iation 'y'tem' and e/uipment

to the etent po''ible9 reate e((iient pi2in proedure'9 and train all employee'

thorouhly9 then they an improve their auray level and 'treamline the u'tomer

(ul(illment proe''" rder (ul(illment rate9 auray o( order (ul(illment and o't per

order (ul(illment are amon important indiator' need to be evaluated routinely"

Ob9e)ti.e of t*e (tud&

• &hi' re'earh aim i' to 'ee the on'umer behaviour toard' online 'hoppin 'ite'

in ndia"

• &o 'ee the hallene' o( etailier'"

• &o 'tudy hih produt i' 'old mo't online"



%4

C*a3ter $

Re(ear)* met*odolog&

3"1 Re(ear)* de(ign

e'earh i' ba'ed on the /ue'tionnaire and people re'pon'e'

3"% Sam3ling

Sample' ere olleted (rom on'umer' o( ae roup 18%5 year' in -hmedabad to

2no their opinion about eetailin" &he total 'ample 'i<e o( re'pondent' a' 10"

3"3 Met*od of data )olle)tion

Both the primary and 'eondary method' o( data olletion ere u'ed" &he primary

data a' olleted throuh a 'trutured /ue'tionnaire" Seondary data a' olleted

(rom Ne' #aper'9 Boo2'9 ournal'9 e'earh paper' and ;eb'ite'"

3"4 S)o3e of (tud&

&he 'ope o( 'tudy i' to determine the on'umer behaviour o( people in ndia"

?hallene' o( etailier' and people thin2in about online 'hoppin"

3"5 8imitation( of t*e (tud&

&he 'tudy a' done on ommon mind'et o( people and it inluded limited number o(

people"



%5

C*a3ter 5

,ata anal&(i( and inter3retation

&he re'pon'e' o( the /ue'tionnaire ere analy<ed and re'ult' ere made

Folloin ere the (indin'

Finding(

• 0D o( the on'umer' are u'in online 'hoppin eb'ite' (rom 1 to % year'"

• $ore than 80D o( u'e online 'hoppin eb'ite' (or 'hoppin a' ell a'

omparin produt'"

• 50D o( the people u'e Flip2art9 hile 30 D pre(er Snapdeal and %0D -ma<on

and other eb'ite'"

• 30D people bouht produt' or are intere'ted in are apparel' and ae''orie'9

40D in boo2' and 30D in eletroni' and other'"

• 0D thin2' di'ount on produt' online are more help(ul and %0D on more

hoie o( produt' and 10D on (ree and (a't delivery"

• >0D thin2' appliation o( online 'hoppin 'ite ha' inrea'ed"

• 0D aree' that online 'hoppin ha' more advantae then traditional

'hoppin"

• 0D people u'e' a'h on delivery a' there payment method hile %0D u'e'

debit ard and 10D internet ban2in and redit ard"

• 60D thin2' that la2 o( tru't and aarene'' are hallene' in online 'hoppin

hile 40D thin2' la2 o( internet"

• 0D thin2' Government o( ndia i' ta2in 'tep' to improve eommere"

• 80D thin2' (uture o( eommere i' ood in ndia"



%6

C*a3ter 6

Con)lu(ion(

&he urrent roth in etailin a' driven by 'tartup'9 and ba2ed by venture apital

and entrepreneur'hip" ;hile the ndian etailin mar2et i' yet to ahieve a 'teady

'tate9 the'e initial entrant' have 'ueeded in apturin the imaination o( a 'i<eable

on'umin la''" &he'e have al'o ated a' a ataly't in the reation o( an eo'y'tem

nee''ary (or the roth o( etailin"

EtailinA' potential annot be tapped on the premi'e that inve'tment' by a (e

orani<ation' ill unlo2 thi' opportunity" Goin (orard9 the pro)eted 'i<e o( etailin by %0%1 ill not be ompo'ed o( pure etailin ompanie'9 a' i' larely the

a'e today"

Etailin i' an interator o( tehnoloy9 loi'ti'9 and in(ra'truture9 and reate' a

relatively e((iient mar2etplae (or vendor' and on'umer'" -t pre'ent9 the ndian e

tailin mar2et i' limited by it' inapability to play the role o( an e((iient interator"

For the roth o( etailin over the net deade i' ba'ed on the premi'e that the

urrent apability o( etailin ill be 'ini(iantly tran'(ormed9 hih ill re/uire the

in(u'ion o( both apital and 2nolede" &hi' role ha' been played in other plae' by

retailer'9 tehnoloy ompanie'9 venture apitali't'9 and private e/uity inve'tor'"

Given the (at that the urrent 'hare o( orporati<ed retail i' under 10D9 and that the

dome'ti venture apital indu'try i' 'till in it' in(any9 poliyma2er' ill need to 'ee2

a rapprohement ith inve'tment and eperti'e (rom over'ea' player'"

Etailin ha' to be vieed in the ontet o( the pro(ile o( ndia that i' poi'ed to

emere over the net deade" &hi' emerin ndia ill ompri'e on'umer' ho ill

have the de'ire9 need9 and onvition to u'e the nternet (or a ho't o( rea'on'9 o(

hih 'hoppin ill be one"

Etailin ha' been o(ten lubbed ith orporati<ed bri2 mortar retail" ;hile there

i' no denial o( the (at that it 'erve' the 'ame end purpo'e9 it al'o annot be denied

that the entire eo'y'tem ithin hih etailin operate' i' ompletely di((erent (rom

bri2 mortar retail9 a' are it' enabler'" &here(ore9 it de'erve' to be on'idered on it'

on merit9 in'tead o( bein lubbed ith bri2 mortar retail" &hi' ill nee''itate

an appropriate re'pon'e (rom poliyma2er' to (ailitate the roth o( an eo'y'tem

onduive to etailin and 'hould inlude:

I penin up o( etailin (or international apital and 2nolede in(u'ion

I Failitatin the 'mooth rollout o( irele'' data ae'' and broadband onnetivity



%

I nentivi<in B%? loi'ti' and arehou'in apability buildin9 inludin the

option o( buildin B%? apabilitie' into ndia #o't

I mplementin the Good' and Servie' &a9 or GS&

t al'o demand' a 'pirited re'pon'e (rom the private 'etor involvin:

I ?apital deployment in B%? loi'ti'9 dome'ti air aro 'ervie'9 and arehou'in

indu'trie'

I -doption o( etailin a' a 2ey roth driver by retailer' and on'umer produt'

ompanie'

I #romotion o( entrepreneur'hip to reate relevant tehnoloy9 analyti'9 and

pa2ain 'olution'

I Buildin 'u'tainable and ndia'pei(i etailin bu'ine'' model'9 e'peially in

hole'alin and di'tribution

I -imin (or *be't in la''+ apabilitie' aro'' the etailin value hain to ompete in

the lobal arena

Coever9 thi' leap o( (aith ill not happen on it' on" ( etailin ontinue' to be

rearded by poliyma2er' a' bein in'ini(iant9 and by bu'ine'' orani<ation' a' a

*pa''in (ad+

EtailinA' urrent roth i' li2e the birth o( a ne indu'try and a2in to the birth o(

teleom and & 'ervie' in the 1>>0'"Both 'tarted 'mall and reorded di'ruptive

roth that haned our live' in many ay'" Etailin ill have to be vieed a' a

vehile that ill drive e((iieny9 reate ne apabilitie'9 and 'hun mediority"

Etailin po''e''e' the poteny to reate ne apabilitie' hih ndia need' and o((er

viable employment to ndian youth over the net deade" t ha' the proe'' to at a' a

ataly't and 'upport the roth o( ne '2ill' and indu'trie'" ( etailin i' inored a' a

nonde'ript and trivial entity9 it ill be another a'e o( a birth ith onenital

di'order'9 a2in to bri2 mortar retail"



%8

Referen)e(

!r" !an Suman2umar etailin in ndia

• Ern't and younebirth o( eommere in ndia

• "e'earh)ournal"om

• &enopa2Etailin in ndia

Documents

E-tailing in India