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- International Journal of Management (IJM)
Volume 7, Issue 7, November–December 2016, pp.271–275, Article ID: IJM_07_07_029
Available online at
http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=7
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ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication
THE RISE OF E-COMMERCE AND ITS SUBSEQUENT
IMPACT ON THE INDIAN RETAIL MARKET
Sijoy Syriac
B. Tech, ECE, VIT University, Vellore, India
Dr. Raghuram J
Associate Professor, VIT University, Vellore, India
ABSTRACT
Online shopping has been gaining widespread popularity not only in India, but in most parts of
the world. And as such, it becomes inevitable for merchants and traders to predict this sudden
surge in growth rate. With various e-commerce giants investing in the Indian market and MNCs
recognizing this potential, it is safe to say that the online revolution has already begun. But what
are the various elements that play a part in shaping the future of online shopping? Through this
research, we bring to light the various factors that have affected the online market in other
countries (mainly U.K., Turkey and Pakistan) as well as India and the measures taken and bills
(mainly, GST bill) passed by the Govt. of India that would invariably affect the future of online
shopping in India.
Key words: GST, Retailing, Technology
Cite this Article: Sijoy Syriac and Dr. Raghuram J, The Rise of E-Commerce and its Subsequent
Impact on the Indian Retail Market. International Journal of Management, 7(7), 2016, pp. 271–
275. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=7
1. INTRODUCTION
The potential for growth in online shopping in India is enormous. There are many factors that can
substantiate this. India has the second largest number of internet users in the world just after China [1]. The
Govt. of India’s concept of ‘Make in India’ has only fueled this spurge in growth. With 3,100 startups in
2014 to a projection of more than 11,500 by 2020, India boasts of the world’s fastest growing startup
ecosystem [2]. The country’s population pyramid is expected to ‘bulge’ across the 15-34 age bracket over
the next decade, increasing the working age population from approx. 761 million to 864 million during
2011-2020[3]. Electronic payment is also steadily growing with a number of startups facilitating this, like
PayPal and Paytm. Another factor is the collaboration of the Govt. of India with MNC’s such as Google
and Microsoft to set up free Wi-fi’s at railway stations across the country. They also intend to extend
internet services to rural areas. In order to tap this predicted growth in online market, sellers need to
understand the nature and the factors affecting the consumer behavior. Thus it becomes increasingly
important for companies to shift their marketing focus from the traditional four P’s of marketing to the four
C’s of social mainly content, connecting, community and curating. This paper will help in better
understanding of the nature of the Indian online market.
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- Sijoy Syriac and Dr. Raghuram J
2. PURPOSE OF STUDY
It is quite obvious that online shopping has become a trend among the Indian consumers. But how long can
it sustain? In the long run, what are the factors that would affect the buying behavior of a consumer? How
should a seller keep up with the growing trends in the market? Through this research, we intend to bridge
the gap between the present and the future of online shopping in India.
3. LITERATURE REVIEW
The internet has always been a fountain of infinite opportunities and growth potentials. Online shopping is
one such product that has emerged from the ever growing need for innovation. An unprecedented growth
has been recorded in online marketing since 1991. Globally, the number of websites increased from 23,000
in 1995 to just around 1 billion in 2016 (Amalesh Sharma, 2011) [6]. Online shopping is a relatively new
concept to the Indian mass but has been hugely successful in penetrating right into the roots of the Indian
market.
In the UK, the internet has penetrated to 84.1% of its total population. So the opportunities and growth
of online shopping is undoubtedly huge. Moreover, the e-commerce in UK takes 10% of the total sales,
forcing companies to take e-commerce seriously. In Turkey, 44.4% of the total populations use the internet
on a regular basis. According to the Turkish Statistical Institute, 21.8% of the internet users bought
products and services over the internet in 2012. This percentage has since only been increasing at a steady
rate. The main purpose being convenience, price advantage and access to a wide range of products. (Seda
Yoldas, 2011) [10]
In the Indian context, various factors come into play that affects the mentality of the customers before
purchasing online. A recent study showed that the product warranties and certification of the websites are
key determinants. Many researchers have agreed on the fact that cognitive abilities differ in cultures like
India that are still developing. These abilities are likely to expand over time, making the marketplace more
elaborate and diverse. (Arun, Xavier, 2012) [7]
Factors in work life that affects the behavior of consumers have been identified by Smith and Rupp
(2003) [8]. Some of these are marketing effort, socio- cultural influence, emotional factor, psychological
and privacy factors, the purchase and post decisions.
According to a survey in Pakistan online shopping is getting popular in the young generation such as
students and professionals. Students usually prefer to buy goods from its original source and they mostly
prefer online shopping. (SajjadNazir et. All, 2012) [8]
Vijay, Sai T and Balaji, M.S. (May 2009) [13], revealed that in spite of the convenience offered, online
shopping is still far from being most preferred form of shopping in India. Their results suggested that
convenience and saving of time drive Indian consumers to shop online; while security and privacy
concerns dissuade them from doing so.
4. RESEARCH METHODOLOGY
Data Collection: The reviews of surveys on customers from varied geographical backgrounds were
performed and analyzed; particularly from U.K., Pakistan and Turkey. Each of these countries varies in
their socio-economic conditions, cultural backgrounds, political scenarios etc. And as such, the factors that
affect the buying behavior of these customers from online sources vary drastically.
Data Analysis: These factors are then compared to the surveys done on the Indian market. We then
analyze which of these factors would affect the Indian mass in the long run. Research is done on the
existing surveys on the Indian markets and the future of online shopping in India is predicted.
5. ANALYSIS
With online shopping gaining widespread popularity, the impact has been seen on the traditional markets.
Vivek Bajpai (2012) [11] explains just this. He stresses upon how online platforms such as Facebook,
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- The Rise of E-Commerce and its Subsequent Impact on the Indian Retail Market
Twitter, YouTube, Blogs etc. have been hugely successful in promoting online shopping. While traditional
sellers do advertise their shops online, surveys have revealed that customers prefer to immediately shop for
an item when they look at an advertisement; which is thus facilitated by online shopping. Thus we see how
customers are increasingly leaning towards online shopping rather than physically visiting a store.
But this impact has varied in different countries. In this research review, we take a close look of the
markets in Pakistan, United Kingdom and Turkey and compare them to the Indian market. We now list a
few of the various factors that have had varied effects in these countries.
5.1. Time Factor
The consumers in Pakistan, U.K. and Turkey all have a positive attitude on time consumption. In Pakistan,
people prefer online as time is saved as they don’t have to leave the place. With the traffic, lack of
adequate roads and parking spaces, consumers find it difficult to physically go to a store. As this is the
exact same situation in India and taking into account the large population, Indian consumers too will have
a positive attitude on time consumption. This attitude is likely to remain same in the foreseeable future as
well.
5.2. Trust and Security factor
There has been mixed responses when it comes to trust and security. In the U.K., which has the 5th largest
economy in the world [4], the majority of the consumers are used to online payment and have little concern
over their security as they have trust and confidence over the payment methods. And as such a majority of
the customers use their credit cards while shopping. But in Pakistan, a large percentage is still skeptical
over their security. People also expressed concerns when their entire customer details were asked. Turkey
too, like Pakistan, is a more traditional country that prefers cash on delivery. Also the average incomes in
these two countries are lesser than that in U.K. And as such, people are more cautious over buying
expensive products online. In India too, a majority of the customers prefer cash on delivery. But this
scenario, as the economy develops, is likely to change. As the average incomes increases and more and
more people are gaining trust towards online payments, customers will soon use their credit cards for
purchase rather than cash on delivery.
5.3. Familiarity with Website Language and Interface
Customers prefer buying from websites that are user-friendly and with a familiar language. If a consumer
is dissatisfied with this, he/she might prefer to shop physically.
In Pakistan 52% of the consumers had either a neutral or negative perspective [8]. A major factor for
this could be the literacy rate which is only 58% as of 2015 [14]. But when it comes to U.K., where the
literacy rate is higher, more number of people are comfortable with the website interface. In India, the
urban population is quite familiar with website languages whereas when it comes to the rural mass that is
mostly uneducated, they find it a lot more difficult to understand the products and the offers. But as the
literacy rate is growing at a rapid rate (73% in 2013 when compared to 64.8% in 2001)[15] and
technological advancements reaching the corners of rural areas, it is safe to say that the familiarity and the
comfort level of the Indian mass with the websites is only going to increase and soon this will no longer be
a problem for online marketing.
5.4. Incomes
Surveys done by Seda Yoldas have shown that the majority of customers shopping online around the globe
are students [10]. Thus invariably it becomes important for sellers to target the students.
In U.K., the students have part time jobs and as such are more likely to buy items online. Whereas in
Turkey, the students are dependent on their parents. This can be a constraint to some extent as they cannot
independently decide while purchasing an item.
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- Sijoy Syriac and Dr. Raghuram J
In India too, the percentage of working students is negligible. Further it’s going to take a very long time
before this mentality changes. Thus the dependency of income on parents affects the purchasing tendency
in India and it will continue to remain the same for some time.
5.5. Product Promotions and Discount Deals
Shopping sites go to great lengths to promote their products. They offer various discounts and attractive
offers which might not be available while purchasing from a physical store. Most consumers in Pakistan
have agreed to this and there is nothing short of offers in India as well. Flipkart and Amazon’s ‘Big Billion
Day’ and ‘Great Shopping Festival’ have already broken the sales records of the country. But many of the
rural population still believe in the power of bargaining, which is not possible online. This is one minor
setback in India but in the long term and for the majority of the customers, the offers and discounts are a
boon which is readily available in online shopping.
5.6. Other factors
According to the surveys conducted by Sajjad Nazir [8], the factors affecting buying behavior in Pakistan
were social factors, psychological factors, emotional and private factors. As the social and religious
cultures of Pakistan and India are quite similar, these factors affect the Indian market as well.
The customers of U.K are found to be more brands conscious. As average income is higher in Britain,
people tend to prefer more branded and expensive items. Whereas in India, the brand orientation is
comparatively less when compared to the rest of the world. But with the increasing number of
advertisements and marketing strategies, more number of people is willing to spend more on branded
goods. As time passes the local goods will soon run out of the market.
Previously, if one wanted to shop online, a computer was required. But with smartphones and tablets
gaining widespread popularity, customers can now purchase items on the go. All these factors indicate that
online shopping is here to stay and is going to dominate the markets for a long time.
Also, with the Goods and Services Tax bill being passed recently in India, the dream of ‘One Nation,
One Tax’ is finally being realized. GST will be a game changing reform for the Indian economy as the cost
of goods and services will be reduced, thus leading to a complete overhaul of the current indirect tax
system [16]. Online retailers will now be able to reduce their prices as the levied taxes on them have been
cut down. Previously, retailers had to set up various warehouses in different states in order to cut down the
transportation taxes. But now, with a common tax for the entire country they can set up a centralized hub
from where they could catapult their products to various parts of the country and thus saving on numerous
fronts.
6. CONCLUSION
Online shopping in India is growing at a rapid pace but it is yet to reach global standards. The shopping
trends and factors affecting consumer’s behavior is somewhat similar to Pakistan and Turkey. But the
popularity and market penetration is far lesser than that of the United Kingdom. With the GST bill being
passed, we can now expect a sharp rise in the growth of online shopping and more and more retailers
would now prefer to market their products online. As per the observed trends and analysis done, we can
predict that the Indian online shopping market will reach that of U.K. in 6-7 years.
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